Donaco upgrades Cambodian slots to better entice Thai gamblers

Donaco International is upgrading its Cambodia casino’s slot machines in anticipation of a good year from Bangkok betters.

It’s illegal to gamble in Thailand so a thriving border industry in Cambodia caters to Thai demand – all of which are off-limits to Cambodians.

Donaco (ASX:DNA) has a casino in Poipet, on the border with Thailand, and one in Lao Cai in Vietnam, on the border with China, which caters almost exclusively to Chinese gamblers as it’s legally off limits to Vietnamese.

It is replacing 900 slot machines at its Star Vegas property, which executive director Ben Reichel says is the second largest of the over 60 casinos in Cambodia.

The largest is the NagaWorld in Phnom Penh.

Casinos have been a reliable cash cow for the Cambodian government since it emerged from civil war in the 1990s.

Last year tax revenues from the industry rose 40 per cent to $US48 million.

Mr Reichel told Stockhead that taxes may rise again next year after the general election. He downplayed occasional reports of Thailand legalising the industry, saying there is too much opposition from Buddhist monks for that to happen.

He also says they may be able to pick up some business in Vietnam after the government starts a three-year trial opening two casinos to Vietnamese, provided they pay a 1 million dong per day bond or 25 million dong per month, and siblings, spouses and/or biological and adopted parents don’t object in writing.

Under the deal with gaming machine supplier RGB, Donaco will pay for the machines via a revenue sharing arrangement.

“The newer and higher quality slot machines are expected to generate increased revenue for the slot machine business at Star Vegas,” the company said, starting from December.

Donaco posted a $31 million profit in 2017 compared to $79 million in 2016. Mr Reichel says that was due in part to the last $19 million fee paid to the now-former manager of Star Vegas.

Donaco shares were flat on Friday morning at 45.5c.