Due to the impact of stiff competition in the market and government policy, Genting Group may lose its status as the casino king in the region, taken over by Philippines and Cambodia.

JP Morgan pointed out that Genting’s casino business has been leading in Southeast Asia for the past 25 years. Due to constraint imposed by policy and also stiff competition from Philippines and Cambodia, the casino business in Singapore and Malaysia is estimated to be overtaken by Cambodia and Philippines. 

The casino market size for Singapore and Malaysia was US$6.1 billion last year while Cambodia and Philippines US$5 billion. The market size for Singapore and Malaysia is estimated to drop to US$5.7 billion this year while the size for Cambodia and Philippines increase to US$6 billion. 

By year 2020 and 2021, Genting’s casino business in Malaysia and Singapore is estimated to remain US$5.7 billion while the size for Cambodia and Philippines increase to between US$6.7 billion and US$7.5 billion. 

Back in 2014, Genting’s casino business in Singapore and Malaysia was US$7.7 billion while Cambodia and Philippines only US$2.5 billion. 

The casino king in Cambodia will replace Malaysia in top three positions in ASEAN this year. 

The report by JP Morgan research pointed out that the customers of casino under Naga pioneered by Dr Chen Lip Keong in Cambodia grew from 29% to 45% in the first quarter this year. Genting Malaysia led by Lim Kok Thay faces double digit plunge in number of customers. 

The research is of the view that such change in customer volume deserves attention especially Naga further refurbishes its casino and adds more gaming tables. 

One third of casino patrons in Cambodia came from Malaysia in the last two years. Since casinos opened in Cambodia in 2017, some Malaysians visited the casino in Cambodia. The trend remained till this year.

Survey revealed that the gaming and tourism revenue grew simultaneously in Cambodia. The increase of tourists in Cambodia remained at double-digit growth in April. The report believes that some of the Malaysian tourists visiting Cambodia are actually casino patrons. Malaysians are the second top revenue contributors to casinos in Cambodia. 

Genting loses its structural advantage in promotion and this accelerates the market shift to Cambodia. 

JP Morgan is of the view that Genting Malaysia has limited upside by expanding its promotion without affecting its revenue rate mainly caused by increase in both casino and income tax. It does not have new facilities to attract patrons. 

Casinos in Cambodia pay low tax rate and do not face restriction in online gaming and expansion of casino. In Malaysia, only 39% of population is allowed to enter the casino and the casino in Malaysia expands every 10 years. 

The government of Malaysia increased gaming tax and reduced the number of special draws, indicating it imposes restriction in gaming. 

The government revised the gaming duty and casino licence fees, prompting Genting Malaysia to cut various costs including its promotion budget. This has caused a gap in competition with casino in Cambodia. 

The casino operator in Malaysia is required to pay 6% of total gaming revenue and RM150 million (US$36.40 million) of gaming licence fee each year and RM50,000 (US$12.13 million) for machine dealer licence fees. 

Cambodia does not base its tax rate on total revenue of casino. 

Dr Chen, who founded Naga, is now the largest casino operator in Cambodia. He owns a gaming licence valid for 70 years with 41 years of monopoly. Genting Malaysia is required to renew its gaming licence every three months. 

The extremely scenic beach in Sihanoukville in Cambodia is a fasting growing city attracting gaming patrons. It may be a threat to Genting Malaysia. Once the `One Belt One Road` advocacy brings in more investment from China, it will attract more super rich from China. 

Of the tourists visiting Cambodia, 33% of them are from China, 5% from South Korea, 2% from Malaysia and 1% each for Singapore and Indonesia. 

For tourists visiting Malaysia, 11% of them are from China, 41% from Singapore, 13% from Indonesia and 2% each from South Korea and Philippines.