PAGCOR Privatisation Could Reduce Annual Universal Healthcare Funding

According to a new legal analysis, the Philippine government’s privatisation plan for Casino Filipino under PACGOR’s restructuring could reduce funding for the country’s Universal Health Care programme.

A report by Geronimo Law states that separating PAGCOR’s regulatory and operating functions may resolve governance concerns. However, this could also impact a major  recurring revenue source for the Philippine Health Insurance Corporation unless lawmakers introduce alternative financing measures.

The findings come shortly after PAGCOR Chairman and Chief Executive Officer Alejandro Tengco confirmed that the government’s proposed restructuring will progress before the end of 2026. 

Under the plan, the Governance Commission for GOCCs will submit its recommendations to the Office of the President before an Executive Order formally separates PAGCOR’s responsibilities.

Current funding model directs casino revenue towards public healthcare

Under existing legislation, PAGCOR pays a five per cent franchise tax on gross gaming revenue and remits half of its gross earnings to the National Government. The Universal Health Care Act allocates half of that government share directly to PhilHealth.

Geronimo Law explained that this formula results in an effective National Government contribution of 47.5 centavos for every peso of gross gaming revenue, with half in support of the Universal Health Care programme.

Based on the statutory formula, the law firm estimates Casino Filipino contributed about PHP3.02 billion to Universal Health Care in 2024 and approximately PHP2.47 billion in 2025.

The report also noted that the funding calculation is based on gross gaming revenue rather than net earnings, so even unprofitable Casino Filipino branches contribute towards healthcare funding.

Licence fee model would generate lower healthcare contributions

Geronimo Law argues that once Casino Filipino properties are sold, PAGCOR will operate as a regulator collecting licence fees instead of also generating casino revenue.

Although licence fees would remain part of PAGCOR’s gaming income, healthcare allocations would be calculated from those fees instead of the gross revenue produced by private casinos.

Using current licence fee assumptions, the report estimates annual Universal Health Care funding from former Casino Filipino operations would fall to around PHP740 million if operators paid a 30% licence fee similar to the current e-games model. Based on 2025 revenue levels, that would create an annual funding gap of about PHP1.73 billion.

“At lower licence fee assumptions, we estimate a recurring loss to universal healthcare of about PHP1.7 billion ($27.5 million) per year to PHP2.1 billion ($34 million) post-privatisation,” Geronimo Law said.

The report also estimates the cumulative reduction in healthcare funding could exceed PHP12 billion before PAGCOR’s current franchise expires in July 2033.

Asset sale proceeds would not replace recurring healthcare revenue

A previous estimate from PAGCOR revealed the sale of Casino Filipino assets could generate between PHP30 billion and PHP50 billion. However, Geronimo Law states that those proceeds would not replace the present recurring healthcare funding from casino operations.

“Proceeds from the disposal of branch assets and licenses are not franchise gaming earnings and thus never enter the base on which the UHC share is based,” the firm said.

Despite its healthcare funding concerns, the report acknowledged that privatisation could still deliver important regulatory benefits by ending PAGCOR’s dual-role.

“Privatisation may be defensible on regulatory grounds (the conflict in PAGCOR’s dual role as operator and regulator) and on fiscal efficiency grounds (shedding branch operating expenses),” the firm said.