Donaco’s casino operations slow down massively
Casino operator Donaco International says operations at its flagship Cambodian gaming venue have slowed to a crawl due to coronavirus.
Calvin Ayre reports that on Wednesday, the Australian-listed company informed investors that it had decided to close “most of” the hotel at its Star Vegas casino in Poipet, near the border with Thailand.
The border with Thailand has been closed for two weeks and the Thai government said Tuesday that it would remain closed until at least April 5.
Donaco said total casino visitation to Star Vegas had averaged 2,430 players per day over the first 22 days of March, down 15 per cent from the first 22 days of February.
However, Donaco noted that its VIP gambling turnover had risen 9 per cent over the same span, suggesting that while traffic may have slowed, high roller traffic remains healthy.
Regardless, Donaco has arranged unpaid leave for many Star Vegas employees for March and April, while also reducing total headcount and deferring some ‘capital expenditure projects’.
Chairman Mel Ashton said the company “very much” regretted the layoffs but it was “a necessary decision for the current environment.”
Donaco also operates the Aristo International Hotel in northern Vietnam near the border with China.
Aristo’s business has also seen “decreased numbers” forcing the company to place unnecessary expenditure and all non-essential staff on hold until further notice.
The pandemic’s impact on Donaco’s operations is spoiling the bounce the company hoped to enjoy after finally resolving its multi-year legal dispute with some Thai vendors at Star Vegas.
Donaco’s shares are currently trading at less than half their value at the start of the year, the result of senior management upheaval and financing issues.
Workers’ protest pays off
A little further south, the Hao Cheng Casino in Sihanoukville has finally made things right with a number of its former staff.
230 former workers had staged a protest outside the venue, seeking salaries their employer failed to pay after terminating them earlier this year.
The Phnom Penh Post quoted a government official saying the casino had failed to pay its former staff due to its owner being ‘financially constrained’ after the government’s new ban on online gambling took effect at the start of 2020.
On Wednesday, the casino reached a satisfactory arrangement with around 170 of the protesters, while the rest reportedly agreed to continue working at the casino.
The Hao Cheng venue had the misfortune of opening its doors last July, just one month before Prime Minister Hun Sen announced his plan to ban online gambling.
A similar protest was staged outside Sihanoukville’s Yaduoli Casino this week.
The Khmer Times reported that nearly 100 staff accused their employer of failing to pay their February wages, which had already been reduced due to the slowdown in business caused by the online ban.
After mediation with local officials, the casino’s management reportedly agreed to pay the overdue wages by Wednesday.
The online gambling ban decimated Cambodia’s once thriving casino sector, with Sihanoukville being particularly hard hit.
However, reports emerged in February that not all casinos had shut their online operations, allegedly due to connections with senior government figures.
Chen growing gambling in Cambodia
Despite the coronavirus outbreak taking a toll on gaming, Chen Lip Keong is trying his luck in Russia.
His NagaCorp company is building a $300 million casino hotel outside Vladivostok, due to open in 2021.
“I like the entrepreneurial spirit behind the development,” Chen told Forbes.
Booming growth at his Cambodian casino complex helped push Chen’s net worth up six per cent to $5.3 billion, now at number four on Forbes’ list.
NagaCorp’s share price has nearly doubled since November 2017, when the Naga2 extension opened in Phnom Penh.
Chen, 72, has used the monopoly licence he won in 1994 to ride Cambodia’s economic re-emergence from decades of war and more recently, a wave of investment and tourism from China into Cambodia.
In 2006, NagaCorp became the first casino operator and the first Cambodia-based company – to list in Hong Kong.
Today it has annual revenue of almost $1.8 billion, up 19 per cent last year and a market capitalisation of HK$48 billion (US$6.2 billion).
A former doctor, Chen got a sweet deal in 1994: a 70-year licence that includes a gaming monopoly in Phnom Penh and the surrounding 200 kilometres that was recently extended in 2045, and special tax breaks.
“Dr Chen was in the right place at the right time,” says Michael Zhu, senior vice president at US gaming consultancy The Innovation Group.
From his first casino on a river barge, Chen built NagaWorld into a major resort, becoming a billionaire.