Pacific Online exits HHRPI, E-Lotto deals as policy tightens

PACIFIC ONLINE Systems Corp. (LOTO) said it is exiting its investment in HHR Philippines, Inc. (HHRPI) following the government’s adoption of a stricter policy against online betting platforms.

Pacific Online, a listed gaming unit of Belle Corp., provides and manages online lottery systems, terminals, and software for the Philippine lottery industry.

“Because of the firm policy adopted by the national government against the licensing of online betting platforms, please be advised that the Company and HHRPI have mutually agreed to revisit their investment arrangement and unwind the same, with a private third party investor agreeing to assume the rights and obligations of the Company from its HHRPI investment,” Pacific Online said in a disclosure on Thursday.

During a Senate hearing on online gambling on Wednesday, Philippine Amusement and Gaming Corp. (PAGCOR) Assistant Vice-President for Offshore Gaming Licensing Department Jessa Mariz R. Fernandez said the agency would further evaluate and implement tougher regulations, including ad bans and stronger player identification checks.

She said PAGCOR continues to review and update its regulatory frameworks to keep pace with rapid technological changes, including emerging game formats and scams.

Pacific Online said it expects to cease being a shareholder of record after securing the necessary regulatory clearances.

“As HHRPI is still in early operation stage, the unwinding of LOTO’s investment in the company is not expected to have any significant impact on LOTO’s financials,” it said.

HHRPI is a PAGCOR-licensed software and professional service provider of electronic gaming platforms for land-based and online gaming operators. It also holds a PAGCOR online gaming license under the “Buenas” brand.

On Jan. 29 last year, Pacific Online signed an investment agreement to acquire a 37.5% stake in HHRPI for P150 million as part of efforts to expand its presence in online gaming. Under the deal, the company subscribed to 81,000 HHRPI common shares, to be paid in three tranches.

Pacific Online previously said that the investment would allow it to expand its presence in the online gaming business through a PAGCOR-licensed company.

It said the capital to be infused into HHRPI would be used to fund the latter’s expansion activities.

E-LOTTO PROJECT
In a separate disclosure on Thursday, Pacific Online said it had decided to withdraw from the Philippine Charity Sweepstakes Office’s (PCSO) electronic lotto (E-Lotto) project following years of delays linked to the government’s broader crackdown on online gambling.

“In a meeting held today, the company’s board of directors, recognizing that the National Government’s policy will no longer be retracted, ordered as follows: that the Corporation’s involvement in E-Lotto be already unwound, and that the company refocus its efforts and resources on other available and more feasible opportunities,” it said.

The company first disclosed on June 19, 2024, that it had received a notice of award from PCSO for a contract covering a web-based application for the E-Lotto initiative. However, the project stalled amid controversies surrounding other online gaming activities, including e-Sabong and Philippine offshore gaming operations (POGOs).

The government later adopted a strict policy against the licensing of online betting platforms, placing PCSO’s E-Lotto project in what the company described as “a prolonged suspended animation.”

In a statement to BusinessWorld in August last year, PAGCOR Chairman and Chief Executive Officer Alejandro H. Tengco said there were no immediate plans to lift the moratorium on new online gaming licenses, noting that regulators would first assess whether doing so would be appropriate.

Pacific Online shares rose by 2.38% to P1.72 apiece on Thursday. — Alexandria Grace C. Magno