Cambodian opportunity

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NagaCorp has had a monopoly on operating casino gaming in the Cambodian capital of Phnom Penh since 1995. Now, the only public company in this Southeast Asian country might be ready to share its success with another operator.

“NagaCorp may consider any sub-concession proposal when the timing is right,” said NagaCorp CEO Chen Lip Keong in a recent Bloomberg interview.

The license under which NagaCorp operates was granted in 1995 and is valid until 2065. It is the longest of its kind in Asia. The license comes with a 40-year monopoly for casino gaming within a 200-kilometer radius of the city, effectively ensuring no competition until 2035. There is no limit to the size of the casino, the number of gaming tables or slots allowed, the types of games offered or operating hours.

The existing Naga Casino had 101 tables and 211 gaming machine stations at the end of 2007. Revenue for the year reached $144 million, up from $85.4 million the year before.

The NagaWorld complex, which includes the casino, hotel and other amenities, is undergoing expansion this year. The hotel has gone from 219 rooms to 508, and will have 700 rooms by the end of 2009. Tables reached 176 in June and will go to 300. The slot offering will expand to 600 stations by the end of 2009.

The clientele exists of specialized tour groups and regular walk-in players. Instead of competing for the high-end VIP market served by Macau, NagaCorp works at drawing mid-market players. A three-tiered program caters to three completely different economic and ethnic groups: table limits up to $50,000 for Cambodian and special junket programs; limits up to $18,000 for Malaysian “mini junket” operators; and limits to $10,000 for travel agents and ground junkets from neighboring Vietnam.

According to Bloomberg, 48 percent of gaming revenue comes from the junket business.