Just over the border from Thailand, Poipet has the legal casinos closest to Bangkok, and is focused on the Thai market. Everything is priced in Thai baht, dealers speak Thai and Thai food dominates the menu. (Photo credit: Muhammad Cohen)Muhammad Cohen

Poipet, a Cambodian boomtown on the Thai border, is 400 kilometers and light years away from world-class NagaWorld in Cambodia’s capital Phnom Penh. However, Poipet has the closest legal casinos to Bangkok at 250 kilometers, a three to four-hour drive on excellent roads. That proximity gives this former refugee center and last redoubt of the Khmer Rouge Cambodia’s second-highest casino revenue, even though a baccarat hand requiring a $100 wager at NagaWorld can be played in Poipet for under $1.

Thai tourists account for 95% of Poipet’s customers, so it caters to them – Cambodian-born Sophal Ear, a professor of diplomacy and world affairs at Occidental College in Los Angeles, once took offense that he couldn’t bet in Cambodia’s national currency. In a good year, insiders estimate Poipet’s gaming revenue reaches $400 million, split among about a dozen casinos. With Thailand’s royal mourning period over, the good times seem ready to roll again, and market leader Star Vegas is revving up.

Star Vegas belongs to Australia listed Donaco International, founded in 2002 by Managing Director/CEO Joey Lim and his late grandfather, Genting founder Lim Goh Tong. Lim his siblings hold a majority of Donaco shares and are entwined in a lawsuit over their father’s estate with their uncle, Genting Chairman Lim Kok Thay.

When Donaco acquired Star Vegas for an eye-popping $369 million in 2015, its gaming revenue for the 12 months ended June 30 was $95 million, up 4% from the year before. Under the deal, Thai businessman and former politician Somboon Sukjaroenkraisri, agreed to manage the property through June 30, 2017 and guaranteed $60 million in annual EBITDA (earnings before interest, taxes, depreciation, and amortization).

He delivered on this promise, despite the death of Thailand’s King in October 2016 and the 12 month mourning period that followed. But Donaco and Sukjaroenkraisri were unable to agree on extending the deal, so Donaco took over management of the property, now branded DNA Star Vegas, and found the going rough.

For the first half of Donaco’s 2017-18 fiscal year, gross gaming revenue fell 41% and total revenue fell 31%. Daily visits were off 18% from last year and 31% from final six months of 2015, before royal mourning began. But Donaco faced a bigger issue. The split with Sukjaroenkraisri wasn’t amicable, and the seller took junkets across the street to his own property, Windsor, previously an extension to Star Vegas.

“Our biggest challenge was to repopulate this casino,” Donaco Chief Operating Officer Gerald Tan says. Donaco recruited new junkets and has the count up to five, all from Thailand and working on revenue share deals, with Star reaping the majority of the proceeds.

Donaco International’s DNA Star Vegas has added karaoke and sauna and plans much more to enhance its position as Poipet market leader. (Photo credit: Muhammad Cohen)Muhammad Cohen

With international marketing partner Vivo Tower, Donaco is rapidly beefing up the property’s appeal. It’s renovated 99 of the hotel’s 350 guest rooms and plans more accommodations in a new tower. For entertainment, it’s added karaoke nightclub Star City, Queen Vegas Sauna, an arcade, Chinese restaurant plus a coffee and beer garden. “We want to keep customers on the property,” Tan says. “We’re happy for them to win, but play here.” Tan and other Poipet operators dream of a golf course or theme park in the future.

On the gaming floor, Donaco is replacing 900 of its 1,500 gaming machines, and Vivo City, headed by Macau veteran Danny Chan, is opening a Naga-style cell casino with music, a bar and food alongside the main floor. Star Vegas is also joining Poipet’s booming online gaming sector and expects to launch 14 tables at the end of this month. Another operator is renting space for its own online operations.

Unique in Poipet, Star Vegas has also created an “international” casino area aimed beyond Thais. The international floor, now with 16 tables, expandable to 48, features its own entrance, Mandarin-speaking staff and Macau style no-commission baccarat. Although Chinese tourism to Thailand it booming–Chinese visitors totaled 9.8 million of Thailand’s 35.4 million arrivals in 2017–Star Vegas is targeting Siem Reap as its primary source for diversification. The site of the Angkor Wat complex is two hours from Poipet via good roads and has an international airport with six daily flights from China, among other places. Star Vegas is reaching out to Siem Reap tour operators to give visitors the option of spending a night or two in Poipet.

Like Naga, Star Vegas can also offer gambling tourists a sweeter deal than Macau, with a free room, commissions up to 1.8% and VIP treatment by depositing as little as 100,000 baht ($3,200). Deposit 20 times as much in Macau and, Tan says, “You’re nothing.” Those players will consider Star Vegas once they’re convinced Poipet isn’t nowhere.