Malaysian-backed 5D Pan Cambodian Lottery announced on Wednesday an official return to business after a failed start-up in the Kingdom five years ago. The company has restructured and is backed by a new shareholder with a bigger capital outlay. The Post’s Hor Kimsay sat down with Alex Teh, president and major shareholder of 5D Pan Cambodian Lottery this week to discuss black market competition and the risks for lottery.
Why has 5D come to Cambodia? Why lottery?
If we look at the lottery industry in a country like Malaysia, the sector is very successful. While there are four licensed companies operating in Malaysia, they all earn a net profit of about $55 million every year. While Cambodia has a population of about 15 million people, the market is big enough for us. There is an upward trend of gaming industry in this country. The lottery market in Cambodia, in the future, actually has a bright future, while the government is also starting to regulate the lottery market. All the black market outlets, are going to disappear gradually in the future.
There are many illegal lottery businesses in Cambodia that are popular. What are your strategies to overcome this demand for illegal business?
The black market is everywhere in other countries too, not only Cambodia. We can say that it depends on the local authorities. The authorities need to intervene on this issue. We realise that now the authorities are trying to regulate the market and they know well about those black market outlets. For us, what we can do is to educate people about the risk of playing on the black market and explain the benefits of playing with a legal company like us. Black market doesn’t pay the tax for the government. For the black market, lottery players always lose. There are many cases that black market operators run away. So players and agents suffer.
What do you think are social consequences of lottery for Cambodians who participate?
Our staff gets a salary, the selling agents gets a commission, the government gets taxes and the players enjoy playing with the hopes of winning the jackpot. We are collecting money and we give up 50 per cent to the players. We give 10 per cent to the ministry. We pay 10 or 15 per cent to the point of sales agents. We can employ about 100 people and the agent also; they earn a commission from their sales. The lottery will not make one bankrupt, but lottery can make ones dream come true.
It is said that gambling is the zero-sum game and lottery also is also a form of gambling. What do you think?
It is 50-50. Whether you win or I win – half of all players will win. Fifty per cent of our sales needs to go to the jackpot to give a way as a prize. If you win, you don’t need to pay tax. On my side, whether you win or I win, I need to pay 10 per cent tax among our total sales revenue. Every $1,000 that we sell, we need to pay $100 to the ministry every month.
You first announced you were coming to Cambodia in 2010, but the business never took off. What happened?
We would not like to comment on why the company failed. But this time, we feel we can be a success.
What is different this time? What is your expectation for your business in Cambodia?
Operating a lottery company requires building trust and financial strength to be successful. Our new operation, alongside the new office, is operated by a new shareholder with a strong financial banking. We will use top technology, good systems, and a better structure to satisfy the client’s need. A lottery company must have strong financial ability to stay for a long time and now we have enough ability with enough financial support to meet the winning jackpot.