​Upping the ante on border casino odds | Phnom Penh Post

Upping the ante on border casino odds


Publication date
28 February 2003 | 07:00 ICT

Reporter : Charlotte McDonald-Gibson

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The Casino: a place where dreams are sometimes made, but more often shattered; where

glamour and vice sit side by side; a site regarded as a favored haunt of film stars

and starlets, gangsters and drug lords.

Cambodia is not short of flash Vegas-style casinos. Phnom Penh has its floating Naga

Casino, a favorite stop for Chinese and Taiwanese businessmen. A garish black and

red structure stands on the Vietnamese border, while Sihanoukville too has a couple

of smaller operations catering mainly to expats and tourists.

But these operations are small fry compared to those along the Thai border. Around

a dozen casinos of varying sizes line the border at Poipet, Pailin, O'Smach and Koh

Kong. Most are part-owned by Thais, and some 90 percent of their customers are Thai


Recent statistics show that nearly 7,000 gamblers cross the border every weekend

at O'Smach alone, with amounts of up to $360,000 wagered in just two casinos.

The reason for such large numbers of punters is simple: casinos are banned in Thailand,

so many Thais, who are not averse to a flutter, flock to the Cambodian side of the

border each weekend.

There are some in the Thai government who believe this is costing Bangkok a substantial

amount of tax revenue. But that could soon change: there has been talk recently that

Thailand will legalize casinos. Thai Prime Minister Thaksin Shinawatra is said to

back the plan.

So what would that mean for Cambodia's booming border businesses? Depending on who

you talk to, everything and nothing. Potential side-effects could see some casinos

close causing job losses, lower revenues, a rise in crime, and former casino employees

turning to a life of drugs and prostitution.

That is indeed a bleak outlook, says Bengt Juhlin of the UN's Office of Drugs and

Crime, but it is not necessarily the full picture. Some of the casinos could yet

lure certain punters.

"If the people had the chance, they would not come to Cambodia ... ordinary

Thai people would not make the effort," he says. "[But] there would be

people who, for very special reasons, would make the trip to Cambodia. If you are

interested in money laundering, and the rules are more relaxed in Cambodia, they

will take advantage [of that]."

In other words, the country's casinos could still offer a solution to criminals wanting

to 'clean' their dirty money. The method is simple: large profits from illegal operations

are laundered by exchanging the money for chips, then cashing them in. The money

is attributed to a big win and thus legitimized.

"The problem so far is they have not been under any particular legislation that

has forced them in a transparent way to show the flow of money. This has potentially

opened them up for criminal activity such as money laundering," says Juhlin.

"There is always a lot of talk and suspicion, but I don't think anybody has

been taken to court for money laundering."

But there are doubtless people here who need such a service: the profits from illegal

timber, drug smuggling, people trafficking and large-scale bribery are worth tens

of millions of dollars a year. That requires a good launderer.

Concrete proof of money laundering is hard to come by, not least because there have

not been any prosecutions to date. Despite the US stance on its war on terror - money

laundering by terrorist groups is a declared target - the US Embassy says they have

no aid programs which aim to tackle the issue.

Juhlin says the Ministry of Interior (MoI) is reviewing the current crop of rules

and regulations.

"The government is now preparing legal procedures that will tighten up the controls

and flow of money. We see this as a step forward," says Juhlin. "The government

established a special task force to investigate the operations of casinos a couple

of months ago, but we can't tell at all to what extent they will make any progress."

The government drafted new legislation to combat money laundering last year. As part

of that it set up a commission, but its current status is unclear. None of the MoI

officials contacted by the Post was able even to confirm whether such a task force


But representatives of the international community don't seem too worried about money

laundering here. Urooj Malik, head of the Asian Development Bank (ADB), says he is

more concerned that the closure of casinos could result in higher rates of prostitution

and drug crimes.

"It is likely to have an effect as Thais are the main customers," says

Malik. "On a social point, jobs will also be lost."

Juhlin says the social benefits of casinos are far reaching.

"[Casinos] create a lot of jobs and they are quite well paid," he says.

"It creates a substantial lift for the community. In Koh Kong, without the casino

there would be no bridge [and] Koh Kong would not be electrified. They create infrastructure,

roads, electricity."

The concerns about job losses are shared by Ros Sovanna at CARE, an NGO that works

with casino workers. He says employees are already suffering because of the closure

of the Thai-Cambodian border, a result of the diplomatic crisis that followed anti-Thai

rioting in January.

And if Thailand opens its own casinos, the likely result will be fewer Thai customers.

That could drive casino employees, who are already at a higher than average risk

of HIV/AIDS, to look for alternative incomes.

"There are around 10,000 casino workers and they are very poor. I think if it

continues like this there will be a big effect and a socio-economic impact,"

he says. "They are lonely. If they are not happy and there is a lack of money

it could make them become indirect sex workers."

The government, however, is bullish about the possible effects of competition. A

senior official at the Ministry of Economy and Finance (MEF), who spoke anonymously,

says by the time Thailand has built enough casinos to constitute a threat, Cambodia's

infrastructure and tourism will be booming with revenue streaming in from other areas.

Of greater concern, he says, is the border closure.

"We will not depend on Thai interests," he says. "They don't just

depend on one nation. In the long run we would look to different projects."

Minister of Tourism Veng Sereyvuth shares that long-term optimism. He says Cambodia

has much more to offer then mere casinos.

"I don't think it is threatening," Sereyvuth says. "Thailand and Cambodia

compliment each other quite well. It is about multiple attractions, different things

that different countries offer. Different clients look for different things [so]

I don't think business will suddenly dry up."

Other than jobs and tourists, the country's casinos are meant to generate tax revenue.

But the MEF official says nobody in government really knows what the industry is

worth or how much money is gambled at casinos.

However it is probably a substantial sum if the eye of the International Monetary

Fund (IMF) is a reliable guide. The IMF, which is engaged in improving various aspects

of revenue raising, suggested casinos be taxed on estimated turnover.

The MEF official says the government has "more or less" taken that suggestion

on board, but on a monthly, not an annual, basis.

All the casinos operate under the same basis with regard to revenue collection, he

says. Finance teams make monthly visits to each establishment and check turnover

by counting the chips cashed in and the number of punters present.

It all sounds a bit haphazard, an impression that seems fair given his comment that

"nobody has accurate information" about turnover.

"We are hoping to collect 2 percent of the total national revenue from casinos

in 2003," he says, "but because of [the border closure] we cannot assess

whether we can do this."

The Post estimates that would total around $8 million. But opposition MP Son Chhay

says past experience shows such a sum is highly unlikely.

Chhay, who favors closing all casinos, says previous experience shows casinos have

never contributed much to the government's coffers.

"Every time we debate the Budget we can't understand why, until 1999, there

was hardly any evidence that money was being collected by the government [from casinos],"

Chhay says.

"The amount is unbelievably low ... compared to what casinos are making annually.

We're talking about $1 million to $3 million a year [earned by government]."

The MEF official admits past problems, but insists tax collection has improved since

1999. He blames the earlier problems on the casinos lacking a tax-paying culture.

But Son Chhay is of the firm opinion that the only good casino is a closed casino.

In the late 1960s legalized gambling brought misery to many Cambodians while benefiting

an elite few, and he is concerned the same is happening again.

Perhaps decisions made in Bangkok will force the issue. Despite the social costs,

he says, the benefits of losing the casinos would far outweigh the disadvantages.

"I believe that our only hope is to reduce gambling in Cambodia," says

Chhay. "It can only bring harm to this country, which lacks the rule of law

and is corrupt, without the proper regulations that can be used to ensure proper

conduct in business."

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