The government stopped issuing licences for internet gambling operations effective Sunday in a bid to crackdown on online extortion, a directive signed by Prime Minister Hun Sen said.

The directive issued the same day said such gambling operations allowed foreign criminals to base themselves in the Kingdom and carry out online scams while masquerading as gaming sites.

The government said it had observed that extortion rackets run by online electronic machine and live gambling operations in the Kingdom, some unlicensed, preyed on both Cambodian victims and those abroad. This affected security and public order, it said.

“From the date of this directive, the Royal Government of Cambodia is to stop issuing licences to online electronic machine gaming and live gambling businesses, both in the Kingdom of Cambodia and abroad.

“Online electronic machine gaming and gambling businesses operating inside the country and from abroad will be allowed to continue their activities within the valid duration as stated in their licence. The Ministry of Economics and Finance must not renew their licences thereafter,” the directive said.

It urged police and military police to raid all illegal online gambling operations.

The directive comes less than a week after 128 Chinese nationals were arrested in Preah Sihanouk province for running a Voice over Internet Protocol (VoIP) online money extortion scam. Authorities said they will be deported.

National Police spokesperson Chhay Kim Khoeun said on Monday that as gambling was illegal in China, the criminals had taken advantage of Cambodia, where online gaming was legal, to extort victims at home.

“Internet [gambling] at casinos is called commercial gaming and is allowed. However, in future, this permission is to end. For those secretly gambling at internet cafes, this has been illegal for some time,” he said.

A gaming manager at a casino on the Cambodia-Vietnam border in Svay Rieng province said on condition of anonymity on Monday that he was not concerned about the new directive as his casino operated online gambling with a licence and regularly paid tax to the state.

“We have an unlimited licence. We have registered our company correctly and are accepted by the government. We pay tax every year, such as a tax on gambling tables,” he said.

Mey Vann, the financial industry director at the Ministry of Economy and Finance, said on Monday that currently almost 200 casinos have been issued with licences.

Most of them were located in Preah Sihanouk province, with the rest situated along the Kingdom’s borders.

He said online gambling was legal as it was included in the licences of the casinos.

Around 30 casinos, he said, were awaiting approval this year after submitting applications to the ministry.

He said those applications may not be approved due to the new directive.

A licence was valid for one year, with the casino owner able to renew it, he said.

“We don’t just have licenses for online gambling. We provide licenses to casinos so that they can construct buildings and create jobs,” Vann said.

He said the new directive meant all casinos must stop online gambling at the end of the year but could otherwise operate as usual.

Preah Sihanouk administration spokesperson Kheang Phearum said licensed casinos in his province were regularly inspected.

He said online extortion had, in the past, been committed by criminals who had rented properties and guesthouse rooms.

“We regularly check these types of places and have cracked down on many cases linked to VoIP scamming,” he said.

Kong, the director-general of the General Department of Taxation, said on Monday that most online businesses did not register with the ministry.

He said the new directive was important in preventing such unregistered operations, adding that tax revenue paid to the state from this sector was very little.

Political analyst Lao Mong Hay said gambling did not create wealth but simply transferred it from one hand to another and was considered a vice in Cambodian society.

“When gambling becomes transnational, it can become a channel for money laundering and other transactions outside the international financial system.

“This could get out of control when our law enforcement officers lack expertise and are not known to be honest or efficient.

“Operators of such uncontrollable gambling, money laundering and transnational financial transactions could well create a powerful state within the state in Cambodia,” Mong Hay said.

Additional reporting by Hin Pisei