CAMBODIA’S growing attraction as a tourism and casino hub could pose a real challenge to Malaysia’s gaming giant Genting Malaysia Bhd
In a recent note, the international investment bank noted Malaysia is expected to lose its position as the third-largest gaming market in South Asia to Cambodia this year.
Malaysian visitors to Cambodia have increased by a third over the past two years, in line with property openings in late 2017 — a trend that has continued in 2019, as evidenced by a 23% growth in visitors for April 2019.
“We think a large part of these visitors are gamblers, given the correlated growth of gross gaming revenue (GGR) with tourism in Cambodia and our channel checks. We believe Malaysians may be the second-largest contributors of GGR in some of the larger casinos in Cambodia,”
It noted that Cambodian firm NagaCorp Ltd reported 29% to 45% higher volumes year-on-year in the first quarter of 2019 (1Q19), versus a double-digit decline in rolling volume for Genting Malaysia.
NagaCorp is a hotel, gaming and leisure operator based in Cambodia, listed on the Hong Kong Stock Exchange since 2006. Its founder and CEO Tan Sri Dr Chen Lip Keong was ranked the sixth-richest Malaysian in the Forbes Malaysia’s 50 Richest List for 2019.
Genting Malaysia’s promotional spending versus Cambodian casinos and found significant gaps which are expected to accelerate market share shifts. We see this trend as structural and don’t expect minor tweaking of spending by Genting Malaysia to tilt the balance.
Recent regulations also play a role in widening Malaysia’s disadvantage. Casinos in Cambodia pay “very low taxes” and enjoy easier rules around online gaming, coupled with less restrictive policies on capacity expansion.
Longer term, Cambodia’s fastgrowing gaming market in Sihanoukville may emerge as another threat for Genting Malaysia as Belt and Road Initiative-led investments drive Chinese visitation and spending to that region and as the quality of properties improve.