From design services to staffing
Hong Kong-listed gaming investor Amax International Holdings has signed a service agreement with Cheung Shing Global Travel Entertainment Ltd. to provide technical and pre-opening services for a new casino now under way in Sihanoukville, Cambodia.
According to the terms of the deal published in Inside Asian Gaming, an Amax subsidiary, Victor Mind Global Ltd., will oversee all aspects of the development, from the installation of IT systems to casino design and recruitment. It will establish organizational and operational structures, set up internal controls, procure hardware and equipment, keep the development on track and help to procure licenses and permits to operate in Cambodia.
Amax will be paid HK$9 million for the year ending in March 2019, of which HK$2 million will be paid before the end of 2018. In a filing to the Hong Kong Stock Exchange, Amax said, “CSG has been sourcing an experienced service provider to assist itself in setting up the casino for operation and the company has solid experience in pre-opening preparation and operation of gaming business in Asia Pacific regions.
“The directors believe that the entering into of the service agreement between VMG and CSG can provide an additional source of income to the group while allowing the casino to leverage the company’s expertise in the gaming industry.” Amax currently operates a gaming hall in Vanuatu under an interactive gaming license and a VIP room at Genting Crown Casino in Poipet, Cambodia.
Hong Kong-listed Suncity Group Holdings Ltd. also is entering the market. The Macau junket investor announced earlier this month that it has a deal to set up and operate a casino in Sihanoukville in partnership with Golden Sun Sky Entertainment Ltd., a subsidiary of China Yunnan Jingcheng Group Co Ltd. According to GGRAsia, the latter, a Mainland China-based group, has a diverse investment portfolio including construction, tourism and aviation.
But Sihanoukville may not have wide appeal for established gaming investors, warns Shaun McCamley, partner and head of Asia operations at Global Market Advisors, LLC.
“There is no doubt that over the past two years Sihanoukville has had—and we continue to see—what can only be described as an explosive growth in the building and development of hotel casino properties,” McCamley wrote in an email to GGRAsia. “The developers as well as financing are coming from China, which is where the vast majority of visitors to these properties will be coming from.”
However, he continued, “In the absence of any meaningful legislation and the government departments in place to enforce, Sihanoukville is always going to be a risky option for first-tier world operators” as it caters to “middle to low-end” Chinese tourists.
Union Gaming analyst Grant Govertsen chimed in, writing, “We do not consider Sihanoukville to be a very competitive market relative to the other regional markets in close proximity (e.g. Phnom Penh, Poipet, Macau, etc.).
“Despite having a large number of casinos already, Sihanoukville does not enjoy a critical mass of quality casinos with which to drive demand. Of course Sihanoukville historically has catered to internet-based gaming providers and has earned a reputation because of that,” Govertsen added, referring to cut-rate gaming operations that stream real-time, live-dealer baccarat games to players offshore.
Suncity Group is controlled by Alvin Chau; the Macau junket firm is said by investment analysts to be the largest single investor in junket room operations in the Macau market. CSG is wholly-owned by Ng Man Sun, chairman and CEO, who holds a 6.44 percent stake in the company.
A draft gaming law to regulate the Cambodian casino industry would be “a big positive” for the industry, wrote Govertsen, but the legislation has been in the works for several years and there’s no firm deadline for implementation.
“Having an appropriate casino law will actually foster investment into the country. To date, that wouldn’t be an option for any gaming operator of significance (other than NagaCorp),” Govertsen wrote. He added that the lack of “proper regulatory oversight” would make the jurisdiction “a non-starter” for most global operators.
The proposed legislation was expected to be passed after general elections this summer, but it’s still in the works. According to a report earlier this year on VOAnews.com, officials said the government was looking to set a tax rate for casino games at between 4 percent and 5 percent to match regional casinos such as Singapore.
It called Cambodia a “Wild West” when it comes to gaming, with 65 licensed casinos and the sector dominated by Cambodian operator NagaCorp Ltd., which has a long-term monopoly on casinos in the capital of Phnom Penh.
Australian operator Donaco International Ltd. runs the Star Vegas casino in Poipet, which benefits from its location on Cambodia’s border with Thailand, where casinos are forbidden. Donaco Executive Director Ben Reichel has said there’s “a lot of unsatisfied demand in the region as a whole. If you look at the number of tables compared to somewhere like the USA, it’s actually a very low number of gaming tables available—which is why there is so much illegal competition going on.”
Gaming halls on Cambodia’s frontier with Vietnam have also flourished due to the ban on locals gambling in Vietnamese casinos. Those casinos could see a drop in business as Vietnam opens the doors to its own residents gambling. The country is conducting a three-year trial of locals gambling at select casinos.
