Cambodia Proposes Draft Gaming Law

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Thursday, November 10th, 2016 | Written by Lucy Brown

While one might not think of Cambodia as a tourist hot spot, the Southeast Asian nation’s tourism industry is growing with around 4.5 million people visiting Cambodia annually for the purpose of vacationing. In fact, tourism currently accounts for 15 percent of the country’s gross domestic product, and the Cambodian government is now considering a new law that would expand gambling in the country further in the hope of giving its tourist market an additional boost.

The current legislation being considered was drafted by the Cambodian government along with input from more than 100 people in the private sector with vested interest in gambling. Commenting on the development, Timothy McNally, chairman of NagaWorld, Cambodia’s biggest casino, stated:

“The common goal of the private and public sector is to continue to grow the tourism industry within the country and further develop Cambodia as the center of entertainment and leisure activities in Indochina. There must be a public and private sector partnership to achieve this goal. We believe that as a corporate citizen we must support and contribute to nation building at this stage of development of Cambodia.”

Present State of Gambling Market

Cambodia currently has 69 casinos that operate under government-issued licenses. For the first nine month between January and September 2016, Cambodian casinos subsequently paid $37.4 million in taxes, representing a 35.5 percent increase compared to the taxes paid during the same period in 2015. Furthermore, this nine month period even exceeds the entire $34.7 million gambling taxes collected over the whole of last year.

In the meantime, NagaWorld casino in the country’s capital city, Phnom Penh, generated $16 million in revenues from January to September 2016, or 43 percent of all of Cambodia’s casino taxes collected.

Tax Rate Changes

The primary purpose of the Cambodian gambling law is to improve the way that taxes are collected, and to provide oversight for the way casinos in the country are managed. The proposed changes to Cambodia’s gambling laws would subsequently likely set a tax rate of somewhere between 4 and 5 percent. This would put Cambodia’s rate of gambling taxation on par with what is assessed by neighboring nation Singapore.

Set Up Gambling Zones

The new law would set up a zone around the current Naga casino in Phnom Penh, prohibiting any new casinos from being opened within 200 kilometers of the casino up until the year 2035. The Naga casino’s license would also be extended until the year 2065 by the bill. Under the proposed law, Cambodia will have gaming trade zones set up throughout the country with three different classifications, namely:

– Prohibited zones; where casinos cannot operate

– Favored zones; where private companies can apply for licenses to operate casinos without a resort.

– Promoted zones; where casinos may be open in integrated resorts, full-service Las Vegas-type casinos with hotels, restaurants and other activities that appeal to tourists. On this point, an ‘integrated resorts development agreement’ will be implemented to permit companies to request a casino license to operate an integrated casino resort.

Create a Gaming Management Committee

If the law passes, the Cambodian government will set up an agency called the Gaming Management Committee, that will be responsible for reviewing the financial statements of all licensed casinos in order to combat corruption, ensure that taxes are paid, and protect consumer interests. Furthermore, the Gaming Management Committee will be able to draft policies and institute regulations needed to control and manage the gambling industry in Cambodia. It will also have the authority to make decisions related to integrated resorts that have in-house casinos and the gaming trade in general.

A Project in Development

As a developing democracy, Cambodia will likely put a version of the bill up for a vote through their Parliament. We’ll keep you posted about the progress of gaming legislation in the Southeast Asian nation. In the meantime, expressing optimism for the future, Grant Govertsen, analyst for Union Gaming Securities Asia, stated:

“We are excited about the implementation of the bill as it will introduce a proper regulatory framework to Cambodian gaming. This should enhance valuation as regulated businesses are typically more valuable. It also paves the way for greater commercial and financial support from institutions that have historically shied away from Cambodia due to a lack of regulations.”