EXCELON PARTNERS CO. LTD.
| REPORT
DigiPlus:
Navigating Shifting Waters
June 29, 2025
Recent regulatory pressures on the online gambling industry have resulted in a significant drop in the market prices of firms primarily offering in online gaming. However, narrative is beginning to shift from a ban to regulation, with the Senate President and some proponents of the ban.
Industry Narrative
Government Responses
Government faces a tangled problem. Cracking down on offshore operators while trying to preserve legal revenue legs. Tighter ads, payment limits, and reform proposals stack up. But enforcement is weak. Compliance costs are rising. Pressure is mounting from both social sectors and industry defenders over tax burdens. The equilibrium remains unstable
Short-Term Impact
DigiPlus shares have already been hammered by investor anxiety. Following proposed regulations—including bans on e-wallet usage (GCash, Maya), a PHP 10,000 minimum deposit, and raising the legal gambling age to 21—the stock plunged as much as 30–40 % from June highs around PHP 65.
Why Markets Reacted
These measures directly threaten DigiPlus's core revenue model. E-wallets and low-deposit access fuel casual and mass-market user activity. Restricting them shrinks the customer base and dampens trading volume.
Mid-to-Long-Term-Outlook
Mandatory Public Listing & Higher Taxes
The government is pushing for mandatory stock exchange listings and a potential tax increase (up to +10 % on top of the existing ~38 % effective rate). That increases regulatory burden and cost of capital.
Operational Strain
Compliance costs and transparency demands may disadvantage smaller players—but DigiPlus, being a larger operator, could absorb these changes better. Analysts say the sector will favor firms with scale and compliance infrastructure.
Migration Risks
Tighter regulations may drive users to illegal operators, hurting formal players like DigiPlus unless the company demonstrates strong compliance and retains trust.
Exhibits
Exhibit 1: Fourth Wall survey indicates that an e-wallet ban may only reduce users by 22 per cent.
Source: Fourth Wall
Exhibit 2: Only 3 per cent of bettors have bet amounts larger than the proposed betting cap limit
Source: Fourth Wall
Exhibit 3: Strong market elasticity to gambling and PLUS' dominance of the market. Scatter Slots' market share presents an opportunity should exchange listings be required.
Modelling Assumptions
Catalysts
Currently, positive fundamental catalysts outnumber downside risks. However, negative headwinds outweigh upside factors in magnitude, with the ban being the most significant threat to the company's core fundamentals.
Positive Catalysts
1) Global Expansion. DigiPlus Interactive's expansion to Brazil and South Africa could increase the firm's financial bottomline by 3x due to similarities in market size and psychographic proximity to PLUS' home market.
2) Structural Advantage. DigiPlus' asset-light structure and market dominance positions it to take advantage of regulatory changes, turning these into moats.
Negative Catalyst
1) Online Gambling Ban. Although unlikely, an online gambling ban poses the most significant threat to the firm's revenue stream.
2) Regulatory Challenges. Contemporary regulations have certain material effects on the company's financials. E-wallet bans and increased taxes would have the most immediate effects.
Modifying Assumptions
1) Management Reliability. Eusebio Tanco's directives have proven to be reliable for PLUS. Hence, a 90% confidence rating shall be maintained.
2) Market Elasticity. A recent survey by The Fourth Wall indicates that 75% of users would shift to illicit gambling operators should a ban be put into effect. This indicates prevailing inelasticity to regulations and shall form the base effect level for light regulatory tightening.
3) E-Wallet Ban. The same survey from Fourth Wall indicates that 98% of users use e-wallets to fund their accounts, with only 2% using OTC payments. However, only 22% of these e-wallet users use e-wallets for their ease of transactions.
PLUS Risk Reward and DCF Model
Risk Reward
Upside (Bull): Light Regulations, Strong Expansion, Regulatory Moating.
Light regulations such as an e-wallet ban, light taxes, and minimum age at 21 years old. This is expected to cut the number of active players to approximately 76.44 per cent. However, revenue share distribution remains vague for local users. Revenue share distribution from academic research shall be used as a proxy instead. On the other hand, a strong expansion is expected to exceed expectations. DigiPlus' domestic growth over the past three years shall be a proxy for the expansion. Additionally, it is assumed that the proposed measure by Secretary Recto would create a regulatory moat around DigiPlus. Should online gambling companies be required to list on the exchange, Scatter Slots would be pushed out of the market due to its Private Equity leanings, resulting in an additional takeover of 10% of the market share.
Base: Strong Regulations, Mediocre Expansion, Regulatory Moating.
Strong regulations such as a total ban on other forms of digital payments, heavy taxation, and top-up minimums could severely impact revenue bottomline. According to the same Fourth Wall survey mentioned earlier, this could further reduce the number of players down to 3 per cent. However, academic research suggests that the same 3 per cent of players contribute about 55% to the total GGR. This is supported by figures from Fourth Wall's survey. On the other hand, the confidence base for the international expansion shall be at 90 per cent, which when applied, is assumed to amount to approximately PHP 130 billion over the next three years. The assumption for moating also applies.