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Published in: Latest Intelligence In the last few months a company owned by Americans operating in the casino industry in Laos, the small landlocked country bordering on economic tigers Thailand and Vietnam, took the unusual step of suing its partner and host Government in the World Bank. The company, Sanum Investments, wasn’t quiet about doing so either. Headlines such as “Major Foreign Investor Sues Laos Over Multi-Million Dollar Investment Seizure” and “Lao Government Sued Over Investment “Misconduct”” appeared in print and online editions of media across Asia Pacific. The company claimed hundreds of millions of dollars in damages when a slot parlour it was operating was taken back by its former Lao partner and landlord after a business dispute. It then had a range of tax charges levied against it by the Lao Government on its casino operations in the southern Lao city of Savanakhet, who suspected Sanum Investments of falsifying gaming earnings and tax payments. The Lao Government even went to the extent of bringing in a firm of accountants from Singapore to run through the accounts for an extended period. The Lao Government adopted a policy of refusing to talk to the press, leading to one sided stories peddling the company’s position or looking for other examples of foreign investments gone awry in the country – few were found and reported on. However, insiders say the senior Government officials are unhappy with the investor’s actions and PR and are now considering a wide range of retaliatory actions against the company. Sanum Investment executives have gone on record saying they are scared for their lives and will not be returning to Laos, choosing to continue to manage their Lao affairs from Cambodia and Saipan. This appears highly unlikely according to other long-term expatriates working in the capital, Vientiane. Rumours swirling around Government circles now say that Sanum Investments may be back peddling furiously in an attempt to retain control of their prized asset, Savan Vegas Casino. The owners of Sanum have also been hit by the closure of their other casino project in Asia, Cambodia's Hatien Vegas. Even though the PR is still rolling out, taxation payments may have been made by the company to the Government, which would suggest a cooling down of the white hot situation between the parties. New casino to open in the North After the closure of the Grand Boten Casino in the Northern Lao town of Boten, which is the main transit point from China (Yunnan Province) into Laos, earlier this year, the Government proclaimed that no further licenses for casinos were to be issued without serious scrutiny of the business plan and the investors involved. Boten, which was a Lao – Chinese joint venture, was touted as a major coup for Laos when it was signed in the late 1990’s. By 2012, rather than being a major economic hub, it was a seedy casino town where Mandarin was the main language, Lao nationals were a tiny minority and rumours of kidnappings and deaths for bad debts blighted what ought to have been a Lao success story. Ultimately, Chinese Government pressure was brought to bear and the Lao Government closed the casino down and, with it, the economic activity it had brought, along with some anger at how this had come to pass. However, one Lao-Thai group, AAC Green City, had already secured a license for a similar style of economic hub before this proclamation. This was to be adjacent to Thailand in the North West and reports are that the casino resort within the development looks like opening later in 2013. Naka Casino will be 3 hours further from the Chinese border by good road from Boten, but it is now the closest casino in Laos to China. AAC Green City owners are a very well respected family from the region and insiders say it is highly unlikely to be operated like its older, now deceased neighbor in Boten.
Published in: Latest Intelligence Sheldon Adelson famously once said that there was room for 10 Macau’s in Asia Pacific. Nowadays he would probably argue that there is room for more than 10. But the Stateline concept of multiple casinos crowded around a small enclave built to accept players from neighboring territories was already well underway before the great man spoke. In Cambodia, the now thriving Indochinese hot spot, the town of Poipet houses 9, soon to be 10, busy casinos, of a scale and sophistication that may surprise many first time visitors expecting the wild west or worse. Poipet is the transit town for Cambodia and Thailand sitting approximately 300km and 3 hours by good road due east of Bangkok. As such it was the perfect location in 1999 for the officially sanctioned re-siting of casinos operating in Phnom Penh in the days before NagaWorld received its monopoly from the Government (operators looked east to the Vietnam border later). So the Holiday International Hotel in Phnom Penh become Holiday Poipet Casino in Poipet, and the rest is history. The Thai gambler, until that point only used to seedy underground casinos in Bangkok, became 99% of Poipet’s playing public and they have visited in their millions ever since. Soon after Holiday Poipet, more casinos were built rapidly in a strip between the two countries’ border posts and the casinos built then still exist today – this is no flash in the pan. Crown Casino, Star Vegas, Grand Diamond and Tropicana soon joined Holiday Poipet. Building in Poipet in those days was not without its challenges; the far west of Cambodia had been a final stronghold of the Khmer Rouge who, in their death spiral, chose to landmine the area around the border town. When building started on the 9 hole golf course just beyond the strip, tales are told of explosions heard on the casino floor as cattle being driven onto the area, intended to be flattened for a green or fairway, were themselves flattened by a mine. The owners of the casinos are an eclectic bunch: Thai politicians, Cambodian businessmen and long term south-east Asian Chinese families who chose to make Cambodia their home and business hub. To put into perspective how well Poipet has performed in the decade plus since its formation, those ownerships remain intact today. Poipet has and continues to be, broadly speaking, a social success, employing thousands of young Khmer who are paid two to three times what they would receive from the garment factories closer to Phnom Penh, learning new languages and building skill levels along the way. When the Government created the casino zone in Poipet years before it surely could never have dreamed of the impact it would have on the youth and extended families of the poor western provinces, for so long ravaged by the Khmer Rouge. Today, however, Poipet faces the most serious challenges to its position as the casino playground for Bangkok, as storm clouds gather in the form of serious competition both short and long term. Firstly, the Bangkok Casinos are back. This has an immediate detrimental impact on the regular player who can avoid the 6-7 hour round trip to Poipet. However VIPs are unlikely to risk the exposure to police raids and prefer the getaway experience of Poipet with its spas, surprisingly good restaurants and accommodation. Thailand has sporadic purges on these casinos and rumour has it that this is expected to continue under the current Government. Secondly, Pailin, Koh Kong, O’Smach and casinos in Southern Laos are growing their offering and are starting to have a competitive product for consideration by the Bangkok player. Koh Kong in particular offers a beautiful beach hotel and an airport (Trat) within an hour’s drive. Finally, there are moves in Burma to open a “Poipet-style” gaming enclave due west of Bangkok, with at least three casinos expected to be developed during 2013. In a partnership with the Government the development will look to appeal to players with a newer, shinier product than Poipet and will cater to the western side of Bangkok’s population whose travel times are longer to the eastern border. Whatever competition it faces, Poipet has stood the test of time, it has made fortunes for the owners and, although as a destination for foreign travellers passing by on a road trip from Bangkok to Angkor Wat it is not a compelling option, as an entertainment venue for Thai gamblers looking for some fun, it is always welcoming. Today, Poipet is a hub for massive online gambling, broadcasting live baccarat tables on the casino floors to Asia Pacific and beyond: going places Sheldon Adelson will never conquer.