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Casinos are flourishing across Southeast Asia and big investors are keen to build more.

Posted Date: Monday, 23-Jul-2012

POIPET: Circling Bangkok’s Lumpini Park looking for passengers, the double-decker bus operated by Cherd Chai Tour company is one of dozens that leave the centre of Thailand’s capital for the Cambodian border every morning.
Casinos are illegal in Thailand but every day hundreds of gamblers make the three-hour journey by express bus to Aranyaprathet on the Thai side of the border to gamble legally at casinos in Poipet, just across the frontier in Cambodia.

Crown Casino, like many others in Poipet, has since June 2010 reimbursed bus fares for Thais who make the trip and offers 100 baht in bonus chips for every customer that cashes in 4,000 baht.

It’s a similar scenario on the other side of Cambodia on the border with Vietnam at Bavet. In the first five months of this year, Cambodia recorded a 32% rise in land crossings by Thai and Vietnamese visitors to just under 720,000, many of them thought to be day-tripping gamblers.

Like Cambodia, Thailand, Malaysia and Laos, Vietnam bans its own citizens from gambling, but the industry for foreigners visiting casinos in many of these countries is booming, says Grant Govertsen, an analyst at Union Gaming Research based in Macau.

“We view the Southeast Asian gaming market as very dynamic with significant future growth potential, especially in Indochina,” he said.

In Poipet, casino construction is visibly expanding beyond the main strip that runs the length of the road connecting the border gate on the Thai side to Cambodia just a few hundred metres away.

In May, Hong Kong-based Entertainment Gaming Asia announced it had started building a new $7.5-million extension to an existing casino that will add 300 slot machines by the end of the year.

The only licensed casino in Phnom Penh, NagaWorld, has also recently confirmed it will open a second $369-million venue, possibly as early as 2015, following the success of its gaming resort by the Tonle Sap River.

Run by Hong Kong-listed Naga Corp, the casino more than doubled its net profit to $92 million last year based on a business model that merges tourism and gambling, says the emerging market specialist Mirae Asset Global Investments.

As both Cambodia and Vietnam prohibit their local populations from casino gambling, Naga Corp’s main customers are Vietnamese tourists who enjoy visa-free access to Cambodia, according to Adrian Lowe and Keith Yeung, Mirae Assets’ Hong Kong-based analysts.

Meanwhile, Naga Corp’s stock has climbed more than 70% year to date in Hong Kong.

After launching a luxury bus service from Ho Chi Minh City with 20 vehicles ferrying Vietnamese customers into Phnom Penh daily from May, Naga is now targeting a dramatic rise in traffic from Thailand.

The casino operator has recruited the advertising agency J. Walter Thompson to conduct marketing in Bangkok, according to Daiwa Capital Markets.

While Thailand shows few signs of legalising gambling even as illegal casinos controlled by powerful interests flourish, Vietnam has permitted a series of resorts to attract foreigners.

The Hanoi government has already licensed four casinos in the north to lure gamblers from China where casinos are also illegal. Two of them will open right on the border in Lao Cai and Mong Cai.

Another casino in Danang in central Vietnam flies in customers from Nanning, Kunming and Hong Kong on charter flights. But Vietnam’s recent foray into casino tourism has already faced teething problems at its biggest new development farther south.
A $4.2-billion casino under the MGM banner 130 kilometres from Ho Chi Minh City on the Ho Tram Strip beachfront has hit a funding gap, the Wall Street Journal reported in May. If completed on schedule, the strip will feature five Las Vegas-style resorts, a championship golf course designed by Greg Norman and thousands of five-star rooms by 2018.

Analysts say developments such as these are further signs that Southeast Asia is ready to start poaching the highest-rolling gamblers from the region’s premier gaming destination in Macau, with the likes of Cambodia in particular having focused on lower-end customers.

Singapore has already established itself as the region’s main competitor to Macau following the opening of Marina Bay Sands and Resorts World Sentosa just two years ago. The two businesses together earned an estimated $6 billion in revenues in 2011, about the same as Las Vegas.

Macau remains the undisputed casino king with $33.5 billion in revenues last year, while Asia is set to become the biggest gaming market in the world in 2013, according to PricewaterhouseCoopers.

Although Singapore doesn’t bar its population from gambling, it requires they pay S$100 to enter domestic casinos and last month added a further 15,000 of its citizens to a list of low-income and unemployed people prohibited from entering gaming premises in what is a hybrid, high-end version of the typical Southeast Asian casino tourism model.

“In the event of laws overturning [in the region], I think the revenue opportunity in markets like Vietnam and Thailand would be very significant, although still much smaller than Singapore,” says Union Gaming’s Mr Govertsen.

Sourced: bangkokpost

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