Logo of Phnom Penh Post newspaper Phnom Penh Post - Border casinos poised to fold

Border casinos poised to fold

Employees operate gaming tables for the online operation of a casino in Bavet in November 2015.
Employees operate gaming tables for the online operation of a casino in Bavet in November 2015. Victoria Mørck Madsen

Border casinos poised to fold

Vietnam's decision to partially lift the long-standing ban that prevented Vietnamese citizens from entering casinos in their own country could spell disaster for gaming resorts in the Cambodian border town of Bavet, which rely almost entirely on Vietnamese gamblers crossing the border to play.

A decree issued by the Vietnamese government on Friday and set to come into effect in March allows casinos operating in Vietnam to apply for a three-year trial licence that, once granted, would allow Vietnamese citizens over the age of 21, and who are able to prove they have a monthly income of at least 10 million dong ($443), to place bets in their gaming hall.

Casinos considered for a licence must have at least $2 billion investment committed to their operations.

While it is not clear when the casinos will actually be given the green light to welcome local punters, Grant Govertsen, head of Asia equity research for brokerage firm Union Gaming Securities Asia Ltd, wrote in an investment note that there will be a “near-term impact” on Cambodian gaming operations given how soon casinos can apply.

“We expect that the border casinos in cities like Bavet will bear the brunt of the downside as the border casinos are significantly easier to reach and have historically captured the lion’s share of Vietnamese customers,” Govertsen wrote. “We would expect many to struggle to survive over the duration of the three-year Vietnam locals pilot program,” it added.

According to Union Gaming, the Vietnamese government has already pegged two locations to launch the pilot program at yet-to-be-built casinos on the northern island of Van Don and the southern island of Phu Quoc, with the possibility of a third in Ho Tram, a coastal beach town 125 kilometres southeast of Ho Chi Minh City.

The possibility of the Ho Tram facility, which would siphon off mass market and VIP travel from Ho Chi Minh, has already caused the firm to lower the earnings before interest, tax, depreciation and amortisation (EBITDA) for Cambodia’s largest casino, NagaWorld, by 2 and 3 percent over the next two years.

While Union Gaming believes that NagaWorld will be largely insulated from a loss in traffic, Soeun Vuthy, general liaison of Lucky89 Group, which operates two casinos along the Vietnamese border, said the toll on Bavet – which relies almost entirely on Vietnamese punters – will be devastating.

“Numerous casinos will close down or go bankrupt because of this,” he said yesterday, adding that all new investment will likely grind to a halt. “It’s not just the casinos that will suffer, but hundreds of jobs will be lost and real estate prices will collapse,” he added.

“Sure the Vietnamese will be very happy to gamble in their own country, but nobody will come to Bavet anymore because there will be nothing left.”

Vuthy added that Bavet is home to nearly a dozen brick-and-mortar casinos, whose operators are already on edge as the Cambodian government moves closer to passing legislation expected to raise the minimum capital requirement from its current level of $100,000.

“Cambodia’s draft law on casino management, which has been sent to us and which we expect to be passed this year, raises the cost for licences and requires all new and existing casinos to have a minimum capital requirement of $100 million,” he said. “Nobody in Bavet will be able to meet the Ministry of Economy and Finance demands.”

Ros Phirun, deputy director of the ministry’s finance industry department, attempted to play down the concerns of Bavet casino operators, insisting that allowing Vietnamese locals to gamble at certain domestic casinos would have minimal impact on the struggling Cambodian casino town.

“These areas are far from Bavet, will likely target a different crowd, and will not have much of an impact on the border casinos,” he said. “They are located there mainly to get customers from around the area, like day-trip gamblers from Ho Chi Minh City who don’t need to stay overnight.”

Phirun acknowledged that Bavet casinos were already struggling and many could not afford licences or a sharp increase of the minimum capital requirement. He said the government would take this into consideration.

“We understand that licences are costly and the $100 million capital requirement in the draft law is too high, so we will probably revise it down to $50 million before it is passed,” he said.

MOST VIEWED

  • Cambodia’s image problem

    In opening remarks at a recent event, Secretary of State at the Ministry of Foreign Affairs and International Cooperation Luy David said information can be a double-edged sword. He told a European Institute of Asian Studies (EIAS) briefing seminar that the media has unfairly presented

  • PM Hun Sen says dangers averted

    Delivering a campaign speech from his home via Facebook Live on Thursday, caretaker Prime Minister Hun Sen said his Cambodian People’s Party (CPP) had carried the country through danger in its latest mandate. He was specifically referring to the threat of a “colour revolution”

  • Bumpy road for local ride apps

    Ride-hailing services seem to have grown into a dominant player in the capital’s transportation sector. Relatively unknown and little used in the Kingdom at the beginning of this year, services like PassApp, Grab and ExNet are now commonplace on Phnom Penh streets. However, the

  • Hun Sen lays out party’s platform

    Caretaker Prime Minister Hun Sen on Wednesday credited liberating Cambodia from the Khmer Rouge as among the reasons why people will vote for his ruling Cambodian People Party (CPP) in the July 29 national elections. Hun Sen, who has held the reins of power in Cambodia