Inside Asian Gaming

INSIDE ASIAN GAMING | February 2014 12 COVER STORY L aos is another Southeast Asian nation that can point to some positive news on the tourism and economic front. Visitors total more than half of the population, with tourism projected to grow by 7.5% for 2013, building on a successful 2012 to become the second-largest industry behind mining. The country is modernizing its economy and has drawn praise from the World Bank for its sustainable development model. Last year saw GDP growth of 8%, moderating to 7.6% in 2014, according to the World Bank. Foreign direct investment has more than doubled since 2011 to US$2.6 billion and is expected to remain around that level. Laos also became a member of the World Trade Organization in 2013. However, in the gaming industry, the country is drawing attention for political issues that have seen major setbacks. Undoubtedly, the biggest story is still the government’s ongoing dispute with Macau-based Sanum Investments Ltd., which ran the lucrative Thanaleng Slot Machine Club in the capital of Vientiane before the company’s local partner seized control of it in connection with a purported business dispute. This was followed by government allegations that Sanum had falsified gaming earnings for tax purposes at its flagship Savan Vegas casino in Savannakhet, which also has been seized. The government had Savan’s books audited and issued Sanum a tax bill for US$23 million. The company disputes both seizures, and the case is set for arbitration at the World Bank’s International Centre for Settlement of Investment Disputes. Sanum is suing for damages of more than US$500 million over the seizures, which include land for another project in Champassak that has been granted to a company called the Solar Entertainment Corporation in violation, or so Sanum claims, of a 50-year monopoly it says it was granted at the site. As of this writing, none of the cases had been settled. Savan Vegas continues to operate, presumably under government and/or local partner control. Sanum is not the only operator to have incurred the government’s ire. A casino called Royal Jinlun in Boten, an area near the Sino- Laotian border, has been closed and the area downgraded from a “special economic zone” to a “specific economic zone” amid stories of kidnappings of Chinese gamblers who had accumulated debts. Reports are that Laotian officials had been pressured to act by China. Deputy Prime Minister Somsavat Lengsavad has since said the government aims to redevelop the zone to compensate for the lack of employment opportunities in the area and floated its potential as a convention or eco-tourism destination. But in a further blow to foreign gaming interests, Mr Lengsavad said that no more casino concessions would be granted in special economic zones, despite the fact that the country planned to expand the number of zones from 10 to 29 by 2020. However, this did not seem to affect another license granted before the proclamation to the Lao-Thai group AAC Green City. Their operation, the Naka Palace Entertainment Hotel & Resort on the border with Thailand, an hour from Chiang Rai International Airport, opened with 534 EGMs in 2013. Another existing property has remained unmolested: the Dansavanh Nam Ngum Casino Resort, with a 6,500-square-foot casino floor featuring 150 EGMs and 60 table games. A further major story was related to the Kings Roman casino, developed by a company called Dokngiewkham and part of a 10,000-hectare special economic zone near the Thai border. There has been unrest there, with rice farmers refusing to give up 3,000 hectares of land the government ceded to Dokngiewkham for an airport. Further developments will be particularly interesting to foreign investors in the context of the country’s WTO membership and the establishment of the ASEAN Economic Community in 2015. LAOS Stunted Progress Savan Vegas is the subject of ongoing arbitration between Sanum Investments and the Laotian government, which has seized the property in a dispute over taxes. Deputy Prime Minister Somsavat Lengsavad said that no more casino concessions would be granted in special economic zones, despite the fact that the country planned to expand the number of zones from 10 to 29 by 2020. The owners of Kings Roman casino were prevented by protesting farmers from taking land the government had ceded to them for an airport.