Saturday, August 13, 2022

How banned is Cambodia's online industry?


Mey Vann, director general at Cambodia’s Ministry of Finance, pulls no punches when it comes to the nation’s online gambling industry. “It’s gone and it’s not coming back,” he says.

However, for industry insiders the situation may not be so clear cut.

Speaking at the recent Mekong Gaming Summit, organised by Asia Gaming Brief, Mey said the government had acted as the situation was out of control. With reports of kidnapping, loan sharks and money laundering rising by the day, Prime Minister Hun Sen had, had enough.

His decision is also likely to have been helped by a prod from China, which issued a strongly worded statement through its embassy in the Philippines in August that any gambling targeting its citizens would not be tolerated.

However, casinos in Sihanoukville, which have relied heavily on live dealer operations, don’t all appear to have got the message.

According to government figures, Sihanoukville has 61 casinos, making by far the largest concentration in the country. License applications in the first half, accounted for 46 percent of the total received and more were submitted in Q3.

It’s hard to take in the sheer scale of the construction boom in the beachfront town, which has long been a haven for backpackers. The 20km ride in from the airport on a Wednesday evening took two long hours, with the two-lane road morphing into at least six lanes of bumper to bumper concrete and heavy material trucks.

Construction is everywhere, with skeleton upon skeleton of uncompleted buildings, and the resulting mess piling up at street level amidst deep ruts in the road and pools of muddy water.

Some of the finished resorts are undoubtedly impressive, hosting some of the biggest Macau junkets in their high-roller rooms.

However, live dealer tables beaming out to clients, most likely in China, are a prominent feature on most casino floors. One casino employee said she didn’t believe the ban was targeted at this kind of operation, which is carefully set up to ensure transparency and fair play.

Her view was mirrored in several properties, with most saying the ban is aimed at weeding out the fly-by-night operators holed up with a camera and a table and occupying hundreds of hotel rooms.

However, one manager at another recently opened operation, was less optimistic, saying the government had been clear that the ban also extends to their live dealer operations hosted from the casino floor. 

According to media reports, Chinese have been leaving Sihanoukville in droves since the online ban, though it now appears that some of the numbers for the exodus were exaggerated and the town certainly still appeared to be a hive of Chinese activity. 

The likely impact of the ban is hard to quantify and there is an argument that evicting the online operations will create more space for tourists. 

Ben Lee, managing partner of iGamiX Management and Consulting, told the conference that on a recent trip to the town, only three of the storeys in his 15-storey hotel were available for paying guests. The remainder housed about 9000 Mainland Chinese hosting online operations. 

“We do have serious gamblers and they are land based,” Daniel Li, CEO of Cambosia International told the conference. “However, you cannot get a hotel room. Having the online operators move out will help Sihanoukville regain its lustre. It will be a beautiful resort.” 

The online operations are mostly outsourced and the casinos receive a share of revenue. Some say that without that revenue the casinos will find it hard to survive as there is not enough foot traffic to the area.

However, there are more than 30 flights a day from Sihanoukville International Airport, with the majority to Mainland China. There is also an ongoing business rationale in the Sihanoukville Special Economic Zone, located 3km from the airport. Spreading over an area of 11 sqm, the zone will host 300 companies once fully built out with plans to employ as many as 100,000 workers.

As costs rise in China, many entrepreneurs are shifting operations to cheaper Southeast Asian destinations and Cambodia, with its close political ties with Beijing, has been a key beneficiary.

Mey told a conference panel that the government was investing heavily to improve urban planning and infrastructure, which has not been able to keep pace with rampant development. This will include a new highway between Phnom Penh and Sihanoukville. 

Still, industry insiders doubt that the online has gone for good and say this is more of a reset button while the government finds a way to regulate activities. There has been talk of appointing a master licensor, with major industry names already jostling for position.

They are sure that once the dust settles, there will still be space for online in Cambodia’s booming casino market. 

 

 

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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