Inside Asian Gaming

August 2012 | INSIDE ASIAN GAMING 31 Feature Exchange -listed company—has just opened a casino at Pailin, Cambodia, just across from a Thai checkpoint. EGT is out to set a new standard for the Asian border casino. EGT’s Dreamworld Pailin opened in May. According to Clarence Chung, EGT’s chairman and chief executive officer, the operation currently has 26 tables and 50 electronic gaming machines. There are also two VIP rooms, with a total of four tables. Grant Govertsen, an analyst at Union Gaming Research in Macau, visited Dreamworld Pailin and some of its local competitors and came away impressed. He saidthattheEGTcasinoisinadifferentleague altogether from the nearby operations, most of which are dreary establishments with tattered carpets, low ceilings and few if any amenities. Dreamworld is more along the lines of a casino in a developed gaming market, with a large, open floor, professional- looking staff and well-maintained machines. While Mr Govertsen is not formally covering the company, he did issue an initial report with his observations. In the report, he describes Dreamworld as a “category killer,” overshadowing all the other border casinos in terms of quality and potential. Quality construction comes reasonably cheap in Cambodia, with Dreamworld Pailin costing US$2.5 million to build. EGT pays a monthly rental of $5,000 for the property and keeps 80% of the operating profit, distributing the rest to its local partner. Mr Govertsen is optimistic about Dreamworld. He believes it sits in a great location, adding that despite the generally low-grade atmosphere of the neighborhood and the lack of upkeep at some of the other casinos in Pailin, they all seemed to be experiencing brisk traffic when he visited. “During the time I was there—mid-day, mid-week—it was all but impossible to get on a table at any casino in the market. Such a high occupancy suggests that the market is likely under-supplied,” noted Mr Goversten. EGT has plans for two more border casinos in Cambodia on the drawing board. The company is scheduled to open a casino in Poipet, a town north of Pailin, by the end of 2012. Poipet is the main land crossing between Cambodia and Thailand and is much better known than Pailin. Pailin is four hours by road from Bangkok, a city of 7 million people, while Poipet has better connections and can be reached in two hours from Bangkok. The Dreamworld in Poipet will be a US$7.5 million slots-only project. In this case, the landlord/partner will take 60% and EGT 40% of operating profit. Also in the works is a casino at Kampot, near the Vietnam border. That project will look to draw customers from Ho Chi Minh City, Vietnam’s most populous city, which is less than five hours away by road. It has a construction budget of US$1.2 million, will include 25 tables and 40 machines, and should be up and running in 2013. EGT’s strategy is very similar to NagaWorld’s, only it is getting quite a bit closer to the target markets of Thailand and Vietnam—the former prohibits casinos, while the latter restricts entry to foreigners. Proximity appears to be especially important when it comes to luring Thais. While NagaWorld’s efforts to market itself to players from Ho Chi Minh City are working well—it has dedicated coaches plying the route between the Vietnamese city and Phnom Penh—Thailand has proved more a challenge. The roads are not as good, the border crossing is less efficient and the distances are greater. EGT has stepped nicely into the breech by offering a service to Thais who may not want to travel so far by car or get on a plane. The Cambodia casino market is thus developing in a bit of a hub-and-spoke manner. NagaWorld is at the center, the undisputed leader with critical mass and a highly sophisticated VIP program. And it is surrounded by smaller operations that take up the intermediate traffic. The markets are largely the same; it’s the scale and location that are different. EGT got its start as a lessor of electronic gaming equipment. It is also a maker and seller of high-frequency RFID and traditional non-RFID gaming chips through its Dolphin EGT Chairman and CEO Clarence Chung Well-appointed—DreamWorld Pailin contains two VIP rooms with a total of four tables