KEY POINTS

  • The Chinese pressured Cambodia to shut down online gaming because it caters to mainland Chinese playing remotely
  • Casinos generated $50 million in tax revenue for Cambodian government
  • Cambodia’s Prime Minister said online gambling is linked to money laundering by criminals

The government of Cambodia will shut down all online gambling activities in the country on Jan. 1. Casinos that fail to comply with the ruling will be punished, Ros Phearun, a government spokesman, warned.

Cambodian government officials will conduct inspections of local casino operators to ensure compliance with the directive.

In the event some casinos still allow online gaming into the new year, the government would revoke their license and initiate legal action against the operators.

Cambodia reportedly decided to end internet gambling in casinos under pressure from China, which considers online betting a catalyst for social decay. Beijing also worried foreign online gaming casinos catered to Chinese gamblers playing remotely. China has significant influence in Cambodia due to the billions of dollars Beijing has invested in the country.

In recent years Cambodia became East Asia’s second largest online gambling hub behind only the Philippines after the Phnom Penh government issued scores of casino licenses, which also allowed online gambling venues inside the casinos.

The Cambodian state grossed about $50 million in tax revenues from casinos in its latest fiscal year.

Prime Minister Hun Sen issued a decree in August 2019 calling for the revocation of all online gambling licenses by the end of the year, adding no new licenses would be issued. Sen also seeks to clamp down on money laundering activities, which have been linked to online gaming in Cambodia.

“I see that if Cambodia's economy continues to depend on online gambling, Cambodia's national security will be threatened,” Sen said at a festival in Kampot in late December. “We’ll be under the [influence] of organized crime groups who will come to Cambodia to carry out their activities.”

The government also declared that “some foreign criminals have taken refuge in the form of [online] gambling to cheat and extort money from victims, domestic and abroad.”

Sen’s government also wants the country to develop a tourism sector that promotes Cambodia’s natural and cultural heritage, rather than gaming.

“In days to come, online gambling will completely disappear,” Sen said.

Cambodia currently has some 141 casinos, about 72 of them in the coastal town of Sihanoukville, many of which are run by Chinese operators. About 89 of the casinos were believed to include online gaming capabilities.

While Sihanoukville itself has seen a huge increase in investments in the construction sector, local people have complained about the influx of Chinese tourists and casino operators into what was once a sleepy coastal village.

But some observers think the ban might be ineffective.

“This is the right thing to do indeed,” said Meas Nee, a political analyst. “However, related to legal implementation, if it's still lax, it will still be ineffective.”

Kim Heang, president of the Cambodian Valuers and Estate Agents Association, a nonprofit organization that represents real estate agents, said the online gambling ban will hurt the local  real estate sector – especially hotels, casinos, and guesthouses -- but only in the short-term. Longer term, real estate will improve, he added, as tourists will come to Cambodia for reasons other than gambling.

Indeed, in acknowledging the online gambling ban, China said it agreed to hold “special discussions on grants to support development” of nongaming projects in Sihanoukville.

However, one of the short-term negative impacts of the ban arrived in the form of immediate job losses.

Some 8,000 Cambodians who worked in casinos offering online gaming have been made jobless.

Yov Khemara, a provincial director of the Ministry of Labor, said that in Sihanoukville “four casinos shut down all their operations while another 23 casinos ended the employment of all staff except security guards, and 33 other casinos temporarily suspended staff.”

Khemara further noted that some of these fired workers came to work in the casino sector because salaries were higher than in the country’s garment sector.

“When the casinos close, they return to the garment sector,” he added.