Cambodia’s online gaming industry is once again in China’s cross hairs, with a senior government official making a thinly veiled threat that the two country’s economic ties might be at risk if action isn’t taken.
Chinese Foreign Minister Wang Yi met with He Nanfeng, Cambodian deputy and Chairman of the Cambodia-China Intergovernmental Coordination Committee, on Sept. 13.
Wang reportedly brought up the issue of online gambling, saying he hoped Cambodian law enforcement will completely eliminate online gambling to avoid affecting “practical cooperation” between the two countries.
China has been cracking down hard on cross-border online gambling and in particular on jurisdictions that target its nationals for gambling purposes. In 2019, it called on its regional neighbours for help in clamping down and Cambodia was fast to respond.
“Prime Minister Hun Sen announced he was banning online gambling from the beginning of 2020.“
The country’s thriving industry was centered mainly on the coastal town of Sihanoukville, where casinos have mushroomed as a front for live dealer operations streaming table games to the Mainland.
The ban sparked an exodus of online companies from the town, although within six months local sources say the industry was back in full swing and in expansion mode.
One local resident said online gambling was still thriving, but “not as in your face” as it was before the ban, while companies were actively seeking to recruit staff for their China-facing operations.
The presence of the industry in Cambodia was also recently confirmed by Philippine Amusement and Gaming Corp. Chair Andrea Domingo, who said many of the companies that had been operating in her jurisdiction had fled to locations such as Cambodia, Laos and Vietnam.
She was speaking after it emerged that the regulator had been unable to collect PHP1.4 billion ($28 million) in taxes from its online industry, as many companies had shut up shop and left. While Cambodian authorities appear to have been turning a blind eye, Beijing is not.
The Chinese state-run media reporting the meeting with Wang reminded that Hun Sen had warned that online gambling in Cambodia risked creating a bubble. Gambling endangers national security and creates a risk for money laundering.
Should this happen “large and powerful companies will not invest in Cambodia,” the newspaper said.
Cambodia’s economy has been a key beneficiary of Chinese foreign direct investment, which totalled $2 billion in the first half of 2021. According to the Council for the Development of Cambodia (CDC), China accounted for 69 percent of total FDI stock.
Beijing has been increasingly wielding its soft power in the region and Cambodia is unlikely to upset its giant neighbour.
Dara Sakor casino expected to open in October
Hong Kong-listed Century Entertainment said it expects the Dara Sakor casino in Cambodia to open in October and that cash flow from the tables will be sufficient to cover operating costs. The company made the comments in a lengthy note explaining the outcome of discussions with auditors as to whether the business remains a going concern. Century had been planning to operate mass tables at a casino in the gambling hub of Sihanoukville.
However, it switched plans to transfer the tables to the Dara Sakor casino. The opening of the resort and subsequent transfer has been repeatedly delayed due to Covid. The company said it has been informed that training and testing of the casino systems will start in Sept, with the gaming business to begin operations in October. In the early stages it foresees operating two tables.
The final number of tables to be operated will be decided once conditions met in a Supplemental Framework Agreement are met, it said.
NagaCorp confident on prospects despite 1H loss
NagaCorp has swung to a loss in 1H21 as Covid forced the closure of the resort for all but two months of the period, but the operator remains upbeat about prospects. The company posted a loss of $77.2 million, compared with a profit of $20.6 million a year earlier. Revenue declined to $130.4 million from $377.5 million. NagaCorp said it remained profitable on the EBITDA level, due to efforts to cut operating costs and cash expenditure.
Adjusted EBITDA was $17.7 million. The company’s NagaWorld property in Phnom Penh closed on March 2 through to Sept. 15 due to efforts to control Covid. The group said prior to the closure it has seen solid support from the local expatriate community. Locals are not permitted to gamble. Gross gambling revenue was $129 million from $372 million, with mass market revenue at $18.9 million, down from $32.6 million. VIP revenue plunged by more than half to $29.8 million.
