Historians may trace the decline of online gambling in Asia to a bricks and mortar failure.

The June 22 building site collapse in Sihanoukville that left 28 construction workers dead and 26 more injured brought unwelcome attention to a Chinese investment tsunami in the once placid Cambodian seaside resort.

Online gambling ranks high among seismic forces propelling that massive wave of funds into Cambodia, and it’s one authorities have chosen to confront.

The building collapse led to the arrests of five Chinese nationals including the owner, adding to China’s unease over an estimated hundreds of billions of yuan flowing out of the country via cross-border online gambling.

Until then, Beijing had been comfortable allowing online operations to continue as part of private investment supporting its Belt and Road Initiative (BRI) in Cambodia.

If the situation got out of hand, Cambodian authorities allowed Chinese law enforcement to fly in, take suspects into custody and then fly them back to China. But by August this year, even regular raids left Beijing believing more had to be done.

“Beijing has definitely flexed its muscle regarding operators that face the China market. They really put their foot down,” FootballBet.com chairman and CEO David Leppo, who runs sports betting in Cambodia, says.

“China has invested billions of dollars in Cambodia. The Chinese government said it would stop investments unless [Cambodian authorities] stop online casinos.”

A Chinese casino lit up by night in Cambodia's Sihanoukville. Photo: Facebook
A Chinese casino lit up by night in Cambodia’s Sihanoukville. Photo: Facebook

On August 18, Prime Minister Hun Sen’s government announced it would not grant new licenses for online gambling nor renew current licenses, all of which are due to expire on December 31.

The announcement stunned dozens of operators and the tens, if not hundreds, of thousands of online gambling workers across Cambodia. Radio Free Asia reported in September that at least 6,000 Chinese nationals left Sihanoukville every day in the first two weeks after the ban was announced for a total of 120,000 departures.

At the Mekong Gaming Summit in Phnom Penh, gaming operators, investors and analysts repeatedly but ultimately futilely implored a Finance Ministry official to admit the government was not serious about the ban.

Leveraging Sihanoukville’s Japanese-developed deep water port, Beijing’s BRI has committed billions of dollars to develop offshore oil, an industrial park for Chinese manufacturers and infrastructure, most notably a US$2 billion highway linking the port to the capital Phnom Penh. When completed early next decade, the highway will cut the journey to less than four hours.

Private money has opened dozens of new hotels and casinos, and hundreds of significant buildings have begun construction in the seaside city.

However, many projects have been mothballed or slowed construction since the online ban was announced. Long-term investors envision Sihanoukville as a casino and beach resort drawing customers from across Southeast Asia, China and Phnom Penh, particularly its burgeoning Chinese expatriate community.

Cambodia has long been drafting a Gaming Law, expected to raise tax rates that rank among the lowest in the region and expand government oversight of an industry with annual turnover amounting to billions of US dollars.

This photo taken on April 17, 2018 shows a showroom of a complex including luxury residence and hotel in Sihanoukville, Cambodia. In the city, construction projects for Chinese people, casinos and hotels are progressing one after another.( The Yomiuri Shimbun )
A showroom sales model of a complex including luxury residences and a hotel designed for Sihanoukville, Cambodia catering to Chinese investors.  Photo: The Yomiuri Shimbun via AFP

For several years, Gaming Law approval has been characterized as imminent, and it still is. At the same time, the government continues to issue new gaming licenses, adding to the largest number of authorized casinos in Asia, with minimal benefit to state coffers and little licensee obligation to host communities.

Through December 31 this year, a casino those licenses include the opportunity to operate online gambling within the casino premises.

In many of Sihanoukville’s estimated 100 casinos, female dealers can be seen at tables with no players in cordoned off areas, presiding over baccarat and other games, often with a phone number on display to call to verify via on-screen pickup that the gambling action is live.

Gaming experts and industry sources believe 90% of the online betting comes from mainland China, where gambling of any kind is illegal. The business is a perfect fit for a boom town like Sihanoukville.

Behind the attractive dealers on the casino floor are thousands of marketing agents, mainly from China. Up to 300,000 Chinese workers were in Cambodia, a large percentage of them in Sihanoukville, before the online gaming ban announcement set off an exodus.

Those thousands of workers provided customers to stay in hotels – many Chinese enter Cambodia on 30-day visas – eat in restaurants and play in casinos, where Chinese and Indochinese share an affinity for a card game known locally as Niu Niu, or Beat the Landlord in China.

Chinese workers have beaten a retreat from Sihanoukville in their tens of thousands since the online ban was announced. But the consequences for Sihanoukville’s boom won’t disappear as easily as Chinese workers.

Chinese customers gambling inside a Chinese-run casino in Sihanoukville, the coastal capital of Preah Sihanouk province, December 13, 2018. Photo: AFP

During this year’s rainy season, Sihanoukville was plagued by floods because so much open land had been covered in concrete, meaning rainwater had nowhere to drain.

Even around the city’s central Golden Lion Square, flooding plus traffic from cement trucks and other heavy vehicles have left roads broken and barely navigable.

The congestion has made basic services such as trash collection harder to execute. Hotels have been cited for discharging raw sewage onto the beaches and into the sea that are supposed to be the region’s prime attraction.

“Belt and Road at its worst” is how one casino executive describes Sihanoukville today.

As Sikhanoukville’s population doubled over the past decade to an estimated 160,000, with perhaps an additional equal number of Chinese expats in residence, housing prices have soared. Even with the recent exodus, the market hasn’t returned to normal.

M’Lop Tapang, a local nongovernmental organization (NGO) involved in children’s and family services, says the property boom has pushed many poor Cambodians to the fringes of town or onto beaches, living in shelters made from discarded doors and other debris without access to clean water and other basic services.

Submerged cars, buses and motorbikes were abandoned during heavy flooding in Sihanoukville, Cambodia, in August 2019. Photo: Twitter/Mother Nature

Sihanoukville’s overriding issue has been a lack of planning and infrastructure. “We never get a sense of what will happen when it’s all built,” says Roth Chanphalkun M’Lop Tapang’s co-director.

She now wonders what will happen to the thousands of Cambodian migrants when Sihanoukville’s construction work slows. She gives newly appointed Governor Kouch Chamroeun high marks for transparency, safety inspections of construction sites and trying to improve service delivery.

“For the last 15 years, we had slow but smooth growth. None of us were prepared for the changes over the last two-and-a-half years. It was way too fast for us,” says Chanphalkun.

From 33,088 international arrivals at Sihanoukville’s Kong Keng Airport in 2016, arrivals surged to 233,547 in 2018. At the same time, few want to return to the city’s somnolent past.

“I was in Sihanoukville filming Angkor Awakens before the massive influx of Chinese and I was hardly overwhelmed,” says director and producer Robert Lieberman, whose documentary features a rare interview with Hun Sen.

“The city felt rather dumpy and the waterfront was a line of shabby honky tonk bars filled with backpackers and college age white kids drinking.”