Inside Asian Gaming

INSIDE ASIAN GAMING DECEMBER 2017 44 ASIAN GAMING POWER 50 2 0 1 7 in Cambodia, plus eight restaurant brands, featuring homegrown concepts and international franchises, often as part of Maruhan entertainment complexes. But Maruhan’s main focus remains pachinko, expanding to 320 parlors across Japan. Meanwhile, player numbers have declined from 29 million in 1995 to around 10 million today. Betting volume, ¥35 trillion (US$318 billion at current exchange rates) at its 2005 peak, shrank to around ¥22.5 trillion this year. Union Gaming Managing Director in Macau Grant Govertsen estimates pachinko’s gross gaming revenue at 15% of betting volume. Accompanying pachinko’s decline, there’s uncertainty about the potential impact of casino legalization in Japan. Pachinko relies on convenience, something to do on the way home from work or shopping; some parlors refrigerate your groceries while you play. Integrated resorts are unlikely to compete on those terms. NagaCorp took a great leap forward with November’s soft opening of Naga2. The US$369 million extension, linked to NagaWorld via retail complex Naga CityWalk, makes the downtown Phnom Penh IR a fully-fledged integrated resort with regional appeal. When completely launched, the two Paul Steelman-designed towers will give Naga a total of 1,700 rooms, 600 gaming tables and upwards of 5,000 machines in the only monopoly casino in an Asian capital beyond Pyongyang. NagaCorp pegs its total capital expenditure for the complex at around US$1.5 billion and says the complex has been valued at US$5.1 billion by commercial realtor Collier’s International. That’s heady stuff, considering Naga began in 1995 as a casino on a barge floating in the Bassac River. Back then, Cambodia was still in the shadow of Khmer Rouge genocide and years of civil war. NagaCorp received a 70-year license with a 40-year Phnom Penh exclusive and low taxes. Its 2006 Hong Kong IPO sought international recognition more than capital, executives say, as Naga brought first world standards and practices to Cambodia. Through its business growth and social contributions, Naga says it has established a win-win relationship with Cambodia. Naga says it produces 25% of Cambodia’s tourism sector GDP and nearly 3% of national GDP. Visitor arrivals, 220,000 in 1995, are approaching 5.5 million this year, mainland Chinese travelers comprising 20%. Naga has declared itself “China-ready.” The resort and affiliated Bassaka Air have partnerships with mainland China’s International Travel Service and China Duty Free Group, the main tenant at Naga CityWalk. Naga is also developing an IR in Russia’s Primorsky Free Zone outside Vladivostok, focused on mainland China visitors and expected to open mid-2019. Chen Lip Keong, trained as a medical doctor and drawn to Cambodia via Malaysia’s “Prosper Thy Neighbor” policy, owns 65% of NagaCorp after financing Naga2 through convertible bonds now held as shares. Chen Lip Keong CEO AND EXECUTIVE DIRECTOR NagaCorp POWER 1,234 LAST 20 SCORE YEAR CLAIMS TO FAME Casino monopoly within 200 kilometers of Phnom Penh runs to 2035, license to 2065. Owns 65% of first gaming company ever listed in Hong Kong NagaWorld extension Naga2 debuted in November 18