Inside Asian Gaming

INSIDE ASIAN GAMING | November 2010 14 resort project with total registered investment capital of US$4.2 billion, meets five-star standard on the total area of 162ha [hectares], located in Phuoc Thuan commune (Xuyen Moc district). The project is divided into six phases, will be expected to complete the entire [sic] by 2020.” Mr Nathan mentioned earlier this year that New York-based hedge fund Harbinger Capital Partners was among a group of investors backing the project. But the Vietnam media report saying Ho Tram technically remains a US$4.2 billion project seems ambitious, given the effort it took Sands China to secure US$1.75 billion debt toward the US$4.2 billion cost of Cotai 5 and 6 in the red hot Macau market. Cover Story Holiday in Cambodia? NagaWorld is doing well, but times are tougher for the border casinos COMBODIA A t last count, 27 casinos were licensed to operate in Cambodia. But tax revenue from the gaming sector declined US$17.5 million from 2008 to 2009, representing a 7% or 8% drop overall, according to the country’s Ministry of Economy and Finance. That was probably a result of the closure of the slot clubs in the capital Phnom Penh in February 2009, rather than the global economic downturn of late 2008. The Cambodian government doesn’t charge specific taxes on gross casino revenues. Would-be operators must pay for a gaming permit issued by the Ministry of Economy and Finance, then pay a flat fee monthly levy on their business. As long as they stay in business, the government should get a constant income. But the willingness of the government to issue new casino licences outside of the capital (NagaWorld has a monopoly within a 200-kilometer radius of the principal city) means too many casinos may be chasing too little business, especially given that Cambodians are not allowed to use any of them. Famous name NagaWorld is the Cambodian casino that everyone in the industry has heard of, even if they haven’t visited. By Cambodian standards it’s huge. It has around 1,000 gaming machines and 176 tables. In late August, Entertainment Gaming Asia Inc., formerly known as Elixir Gaming Technologies, Inc, announced it had reached 670 gaming machine seats in operation at NagaWorld. That was a more than two hundred percent increase from the number of gaming machine seats the company had at the resort in January 2009. NagaWorld also boasts the biggest conference hall in the country, as well as a hotel complex. Nonetheless, even NagaWorld’s resort status couldn’t protect it entirely from the effects of regional recession. It was hit harder and faster than the Macau casinos. In the first half of 2009, VIP revenues at NagaWorld fell 66.8% to US$34.1 million, from US$102.8 million in the equivalent period in 2008. Results for the first half of 2010 published in August showed a sharp improvement. NagaCorp’s net profit for the period totalled US$21.1 million, up 83% from the US$11.5 million recorded for the first half of 2009. Chasing the mass The mass-market segment, comprising the main floor and the gaming machine zones, generated 70.2% of NagaWorld’s US$67.1 million total gross revenue—a sharp contrast to its 46.4% contribution last year. Junket revenue, meanwhile, fell to 29.8% of gross revenue from 53.6% for the first half of 2009. It brought in US$20.2 million this year, compared to US$34.1 million in 2009. That may have contributed to the decision of NagaWorld management in late August to refocus its strategy away from mid level high rollers (typically with check in levels of US$25,000), and instead focus on mass-market players. As Cambodia’s economy booms and foreign trade and exports increase, the resort’s operator, Hong Kong-listed NagaCorp, will be well positioned to drive further mass market business via conferences and exhibitions—in the manner of The Venetian Macao. Frontier properties The story for Cambodia’s 26 border casinos, serving players mainly from Vietnam and Thailand, is not so rosy, even though currently more are planned. Entertainment Gaming Asia announced at the end of May that it had been granted a casino licence by the Cambodian government for a project, dubbed Dreamworld Casino and Resort, in Takeo Province, near the Vietnam border. Dreamworld is slated to include a casino and hotel on more than seven acres Weathering earlier economic storms—NagaWorld in Phnom Penh