Saturday, August 13, 2022

Cambodia gaming down but not out after Covid-19, online gaming ban


Cambodia’s gaming industry has taken a major knock from the Covid-19 crisis and last year’s ban on online gaming, but those on the ground are optimistic it will bounce back stronger than ever.

The country had been one of the most rapidly expanding jurisdictions in Asia, with about 118 properties in operation at the end of the year, with most centered on the southern coastal town of Sihanoukville. 

The economy expanded by 7 percent last year, helped by Chinese investment as part of Beijing’s “one belt, one road” project, providing a strong visitor base for its casinos. It’s expected to contract by 0.3 percent this year, before rebounding 6 percent next, according to Moody’s Investors Service.

However, rampant growth, rising crime and pressure from Beijing caused Prime Minister Hun Sen to pull the plug on online operations, raising questions about the viability of many land-based casinos, which were essentially little more than a front for live dealer and other online activities.

“The double whammy of the online ban and Covid-19 will ultimately decide which operations can continue viably,” said Dominick Stenson, casino director at Queenco Hotel & Casino in an interview with Asia Gaming Brief. 

Queenco Hotel & Casino is based in Sihanoukville, once a sleepy backpacker haven, that has been one of the hardest-hit regions in the country due to Covid-19 and the government’s vendetta against -online gaming.

“Those who were here for a quick hit when Sihanoukville was at its peak will undoubtedly disappear, not having the stomach to see out this crisis.”

That being said, Stenson believes that the new, larger ‘resort’ style operations, supported by improving infrastructure, will be able to get through the current crisis provided that the country’s borders and international flights open up ‘soon’. 

“Every visitor here describes Sihanoukville as a 'giant building site'. But having lived here through all the construction, the infrastructure is now really taking shape,” he said. 

“I'm quite sure, given the above factors, that although the resilient Sihanoukville stakeholders will not be ringing bells in 2020, they will see the light at the end of the tunnel and the huge potential going forward.”

Queenco’s owner Yigal Zilkha has taken the opportunity during the lull to undertake major renovations in the casino and around the property in preparation for its eventual reopening, he said. 

Tim Mcnally, chairman of Hong Kong-listed NagaCorp, shared a similarly optimistic view of the industry. 

“Although Cambodia has not been spared the impact of the global pandemic, the country has experienced low numbers of infected people, as well as few deaths. The country has managed the crisis quite effectively... As a result, we anticipate that the business climate will improve over the next few months.”

To date, the country has confirmed 122 reported cases of coronavirus cases, all of which have recovered, and no fatalities. There have been no new reported cases since April 12, 2020. 

Despite the news, McNally expects it to take ‘some time’ before tourism returns to normal. 

“Since the beginning of the company more than 25 years ago, we have enjoyed frequent travelers from Malaysia and neighboring countries and expect this segment will return as the threat of the virus diminishes. Cambodia will also continue to be an attractive destination for China visitors as it remains a comfortable cultural fit, competitive travel cost destination, and a developing market for China entrepreneurs.”

In 2019, Cambodia welcomed more than two million visitors from Mainland China, one-third of whom were there for tourism.

The casino operator, which holds a monopoly gaming license in Phnom Penh, said it is prepared to re-open for business as soon as the government gives official approval. It plans to follow Covid-19 guidance issued by the government and plans to implement further measures to promote the well-being of its guests and staff, where necessary. 

However, one industry insider says that the Covid-19 pandemic has benefited the industry more so than others are willing to let on. 

In an interview with Asia Gaming Brief, Danny Too, general manager of Cherry Interactive said he had personally witnessed intense online gaming traffic.

“In fact, during the coronavirus pandemic, online gaming activities (especially live dealer) mushroomed to some insane figures and I personally witnessed some of the numbers via the gaming back-office of some operators in this industry,” said Too. 

Live dealer operators, who were previously operating out of the Philippines, have now moved back to Cambodia unofficially, said Too. 

“It is definitely not a secret anymore amongst the people in this industry,” he added. 

“Due to the so-called Covid-19 pandemic, authorities are not actively pursuing online gaming operators, and thus, this pandemic is, in fact, benefiting the operators by a great deal.”

Too believes Cambodia will continue to be a viable market for gaming operators, both land-based and online. He said he believes the online gaming ban that was enacted earlier this year should be seen as a “reset button”, rather than a permanent ban, allowing for more proper control measures to roll out. 

“Cambodia will definitely be back on track as a gaming destination and give the Philippines a run for her money. If you look holistically at the whole gaming picture, the "boom" has already started and ultimately, money and power talk. As long as you pay your dues and ride the right horse, you can safely get on the gaming wave here.”

 

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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