Claiming it was at the losing end after almost 18 years of leasing lotto machines, the Philippine Charity Sweepstakes Office (PCSO) yesterday bared it will no longer extend the contracts of two lottery technology and equipment firms, a move which would translate into savings of at least P7 billion annually in lease payments.
At a congressional hearing by the House committee on games and amusement, PCSO Chairman Margarita Juico assured lawmakers that the state-run lottery firm will no longer avail of the services of the Philippine Gaming Management Corp. (PGMC) and the Pacific Online for its lotto operations as soon as the service and lease contracts with the two firms expire.
The PGMC’s contract ends in 2015, while Pacific’s contract expires next year.
The contracts, reportedly extended in 2005, have been the subject of criticism by the Commission on Audit (CoA), which noted certain violations allegedly committed by the parties involved.
Juico said that under the original 1995 contract with PGMC, the PCSO should have benefitted from the transfer of lottery technological know-how by the time the deal expired. The contract also called for a three-percent commission for the PGMC out of the lotto sales.
However, Juico said that when the contract expired in 2005, the technology was not transferred.
Instead, the PCSO extended the contract for another ten years and the commission PGMC was to receive was hiked from three to ten percent.
Hosue games and amusement committee chairman Manila Rep. Amado Bagatsing and Zambales Rep. Ma. Milagros “Mitos” Magsaysay called on the PCSO to start preparations for independence from the two firms.
PCSO general manager Ferdinand Rojas revealed that they have conducted studies on the proposal and are expected to start operating their own lottery system with least reliance on technology and gaming firms, especially those run by foreign firms.
“Every time, we negotiate for lower rates, they throw the issue to Malaysia,” said Juico, apparently referring to the PGMC.
Earlier, the PGMC, a local gaming unit of Malaysian conglomerate Berjaya, decided to sue PCSO for  violating what they claimed to be an exclusive leasing deal and forging a new deal with another firm without conducting any bidding.
Reports indicated that Berjaya Philippines, which owns PGMC, passed a resolution authorizing the “filing of civil, criminal or administrative cases before any court, tribunal or quasi-judicial agency in connection with any matter related to or arising from the equipment lease agreement with PCSO dated Jan. 25, 1995.”
The PGMC had claimed an exclusive agreement with PCSO in Luzon which prohibited the state lottery firm from entering into a contract without public bidding.
It was learned that PCSO’s deal with Pacific Online was the object of the PGMC complaint.