Siem Reap a possible development site
Cambodia has many of the elements that could spell success for a global gaming operators, according to Andrew Klebanow of Global Market Advisors.
Speaking to GGRAsia at G2E Asia, Klebanow cited an expanding domestic economy, growing tourism, rising investment from China and the prospect of new, stronger regulations for the casino industry. He also noted that Cambodia’s “China-Ready” policy aims to attract 2 million Chinese tourists to the country annually by 2020.
Unlike Vietnam, which requires an investment of at least $2 billion for casino companies wanting to get a foothold there, Cambodia has no mandatory minimums and could benefit from international investment outside Phnom Penh, where Hong Kong-listed NagaCorp Ltd has the exclusive right to casino operations.
“In Poipet, you see 14 or so properties and they are pretty run down, pretty unappealing,” said Klebanow, of the border town that serves many gamblers from Thailand, where casinos remain illegal. “Donaco might be the class in the market, but it’s nothing more than a three-star experience.
“There is certainly room for an international operator who knows how to build quality, who knows how to operate quality, to go into a market like Poipet or Bavet and dominate and change the whole gambling paradigm, much like Sands Macao did when they opened up in Macau,” the analyst said. Bavet is also a border town with casinos, primarily serving people from Vietnam, where casinos are presently closed to locals.
Another plus for the Southeast Asian country is its plan to enact stronger regulations around the casino industry. A 2017 report by the Asia/Pacific Group on Money Laundering said Cambodia has made “significant improvements to its level of technical compliance” regarding international standards on the “criminalization of money laundering and terrorist financing; customer due diligence; record-keeping; and suspicious transaction reporting.” The report added that “further improvements in technical compliance are necessary.”
Klebanow said Cambodian officials “understand that if they want to attract international operators, they have to create a very robust gaming regulatory environment. They have to have robust accounting standards; they have to investigate their operators regarding background and they have to come up with a fair and reasonable tax rate.”
He said draft legislation along those lines could be on the table by summer. “And I suspect we will see a gross gaming tax rate well under 10 percent.” Several media reports out of the country have suggested the GGR tax might be 4 percent or 5 percent. In Macau the effective tax rate on casino GGR is 39 percent.
Siem Reap, a town located near Cambodia’s UNESCO World Heritage site of Angkor Wat could be a possible development site, though it’s uncertain if the community would permit a casino in the vicinity. Another possible site is the southern coastal resort of Sihanoukville. Klebanow said he “can’t explain the amount of capital that’s going into Sihanoukville right now in terms of hotel and condominium development,” unless it means some investors have the inside track on casino development.
“The airport is bursting at the seams and can barely accommodate the flights it has,” he noted.
