PHNOM PENH (Khmer Times) – VIPs from Thailand continue to drive Cambodian gambling. The Star Vegas Resort & Club in Poipet posted Monday a 17 percent increase in net revenue in fiscal year 2015 compared to the previous year, largely due to Thai high rollers.
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“The Star Vegas [is] offering considerable growth potential,” Aaron Muller, an analyst with Canaccord Genuity (Australia) Ltd. wrote in a report.
Earlier this month, the Finance Ministry reported that Cambodian gaming tax revenue was up 20 percent, to $12 million in the first half of 2015, compared to the same period last year, with Thai gamblers largely to thank.
The head of Thailand’s military government, General Prayut Chan-o-cha told Royal Thai Police to stop shoring up casino gambling in the country earlier this month, according to Thai media. Given Thai crackdowns, Cambodian border casinos will be in demand, gaming analysts anticipate.
VIP Turnover Rising
The Star Vegas casino posted a 69 percent increase in VIP table rolling chip turnover, fiscal year over fiscal year, increasing by $1.58 billion. This growth was especially strong in the second half of the fiscal year, according to an Australian Securities Exchange filing posted by parent company Donaco International, which acquired the resort earlier this year.
VIP table game gross revenue increased 54 percent, to $103.7 million from $67.6 million. Main hall table game revenue only increased by 18 percent, to $19.2 million from $16.3 million.
Junket commissions on VIP tables grew by 64 percent. The increase in junket commissions raised net revenue from table games by 21 percent.
According to the casino, this growth was driven by Star Vegas marketing to VIP players, better border conditions in Cambodia, and the Thai government’s crackdowns on illegal gambling in the Bangkok area.
Ongoing infrastructure improvements connecting Poipet with Greater Bangkok helped as well, according to the filing.
Echoes of Nagaworld
NagaCorp Ltd also bet on VIPs, albeit from China. The company expanded the VIP floor space in NagaWorld, leased jets to a local airline to fly in high-rollers, and signed a deal with Macau’s largest gambling junket operator.
Revenues from VIP junkets accounted for 46 percent of NagaCorp’s total revenue in 2014, up from 39 percent just a year earlier.
The VIP segment grew by 41.3 percent. By comparison, mass market floor tables generated only 21 percent growth.
Despite overall tourism growth from China, the VIP segment may be in decline. An anti-corruption drive in China has reduced the total number of high rollers that dare to fly out and spend on casinos and duty-free shops, according to analysts.
Furthermore, with the expansion of Vietnam’s gaming industry, fewer gamblers come here from the east.
Morgan Stanley warned that VIP revenue may be “volatile” from higher commission costs, leading to lower margins. CIMB research also showed that high incentives paid out to VIP junkets can drag down earnings.