DigiPlus Interactive Eyes Acquisition of City of Dreams Amid Tax Incentive Strategy

DigiPlus Interactive (PLUS), the proprietor of BingoPlus, ArenaPlus, and GameZone, is reportedly the frontrunner to acquire a stake in City of Dreams from Melco Resorts & Entertainment, owned by billionaire Lawrence Ho. Discussions between PLUS and Melco have been ongoing for several months, focusing on a potential takeover of the integrated resort, which is currently a 50-50 venture with Belle Corp., controlled by the Sy family.

Negotiations have faced hurdles, particularly due to the significant decline in PLUS’s share price, which has dropped by approximately two-thirds from its ₱65 peak recorded three months prior. A source familiar with the talks highlighted that the primary motivation behind PLUS’s interest lies in the tax benefits associated with transitioning from a purely online gaming operator to an integrated resort (IR) operator.

Currently, as an online gaming entity, PLUS is subjected to a tax rate of about 30%. However, operating as an integrated resort, which permits hosting online gaming under its licensing framework, would allow PLUS to benefit from a preferential tax rate of roughly 21%. This 9-percentage-point reduction in tax liability represents a significant financial incentive driving the acquisition discussions.

The potential tax savings are especially pertinent considering PLUS’s recent financial setbacks, with revenues reportedly declining amid increased government regulation targeting e-wallet usage and gaming advertising.

Melco, which initially invested around $2.4 billion into City of Dreams starting in 2009, has expressed intentions to divest certain assets following years marked by sustained losses and rising debt burdens. The possible transfer of ownership to DigiPlus Interactive could mark a strategic shift in the management and operation of the venue.