Inside Asian Gaming

December 2012 | INSIDE ASIAN GAMING 19 determined. It can be as easy as just insisting on, for example, paying out what you get in, a practice scrupulously followed by Naga. If somebody brings cash to the casino, their winnings are disbursed in cash. If a wire comes in, a wire can go out. If a check comes in, a check can be issued. The point is to avoid turning cash into something more legitimate. NagaWorld has slowly built its credibility. When the financial markets collapsed in 2008, Naga collapsed with them. In fact, it significantly underperformed relative to global markets, dropping to a low of 55 HK cents in 2008 from the high of HK$2.72 in 2007. The company was new to the public markets, listed in 2006 in an IPO, and the Cambodia tourism and recovery story was not yet fully appreciated. Investors ran from Naga. Now it is very different, with Naga well known and understood by investors, in part Now it is very different, with Naga well known and understood by investors, in part because of the proactive investor relations done by management and details provided by it. At the same time, Cambodia has also matured quite a bit. It is no longer seen so much as the Wild East. because of the proactive investor relations done by management and details provided by it. At the same time, Cambodia has also matured quite a bit. It is no longer seen so much as the Wild East. Significantly, the country is starting to take AML seriously. In 2011, Cambodia publically expressed a desire to fight illegal financial transactions, and it is not on the Financial Action Task Force’s so- called Black List—interestingly, Thailand is. Naga continues to focus on the basics and getting them right, and finding ways to enhance performance. But it is also mindful of the need to rein in costs. The company recently looked into switching to RFID chips, for example, but after running the numbers it concluded that investing in the security-boosting and performance- enhancing technology is not yet worth it. Naga did, however, invest in a Bally Casino Management System to evaluate overall performance with the numbers it does have. It also launched its first loyalty program, the Golden Edge Rewards Club, in January 2012 For the time being, the company is happy with the mix. The Vietnam mass market has held up remarkably well despite the economic troubles in the country, and traffic is good from Malaysia. Naga still likes the mass market and low- end VIP market. “Mass market 63%, VIP 36% is an ideal mix,” says Mr Lee. “It gives us the highest profit margin.” But this could start to change. Naga 2 is set to open next to the current Naga in 2015. The new structure will have 1,000 hotel rooms and, significantly, 50 VIP suites, where a player and guests can gamble in what amounts to a small self- contained casino. Ground was broken on Naga 2 in November 2012. One minor concern for the company, but one that irksmanagement, was the opening of border casino operations at Pailin, Cambodia Governance for the risk ofmoney laundering. The institute cited corruption, secrecy in the banking sector and the lack of transparency as reasons for concern. Dollars freely wash around the economy, the borders are porous and banking and government officials can be bribed. To assuage concerns, Naga has put the issue front and center. It brought aboard Tim McNally, a former FBI special agent and Hong Kong Jockey Club head of security, as chairman; it has commissioned two independent AML audits, in September 2011 andJanuary2012,byHill&Associates,aHong Kong-based risk management consultancy; and it has had employees undergo Certified Anti-Money Laundering Specialist training offered by the Association of Certified Anti- Money Laundering Specialists. The casino is now seen as a local leader in AML best practices and has been asked to advise others in implementing proper procedures. The fact is, AML is fairly easy to do, as long as a company wants to do it. It’s not like a bank, where a customer’s identity has to be verified and the source of funds NagaWorld’s main gaming floor FEATURES