Cambodian Phenomenon: Ban on Gambling and "Casino Strips" in the Buffer Zone

The Kingdom of Cambodia, one of Southeast Asia's poorest and most corrupt nations, seeks foreign capital to improve its economic situation. Chinese and North American companies view Cambodia and its border areas as ideal for constructing vast entertainment casino complexes with premium hotels. The vision of transforming Sihanoukville into Asia's Las Vegas was partly realized before the pandemic froze construction. Sihanoukville's unfinished skyscrapers, abandoned by investors, now face ownership disputes among various businessmen.

By 2023, Cambodia's economic situation had further deteriorated. The Ministry of Finance reports a 90% drop in housing prices post-pandemic, leading the local middle class (15% of the total population) to dwindle into poverty.

In 2023, the government aimed to attract investors by creating favorable conditions for China and other nations—offering tax benefits, a simplified visa regime, and additional free economic zones. Cambodia aims to revive plans for a Las Vegas in Sihanoukville, boosting the gaming industry nationwide. Gambling establishments and hotels around Sihanoukville are projected to attract $16 billion in investment capital, contributing significantly to the treasury through taxes. Developing the gambling industry presents a promising opportunity to rejuvenate and fortify Cambodia's economy.

Despite strict prohibitions for Cambodians, corruption allows widespread gambling. The country is infamous for numerous illegal gambling houses and bookmakers. Additionally, Cambodians, driven by passion, engage in home games, indoor activities, high-stakes cockfights, and the popular casino game of baccarat.

Is a Casino an Economic Aid or a Centre of Human Trafficking in Cambodia?

The expansion of the gambling industry in Cambodia faces opposition, not from within the country's government or royal family, but from political figures in EU nations and various American and European human rights organizations. Additionally, US politicians vie for influence in Cambodia against China.

Certain portions of Cambodia's land, especially along the border with Vietnam and Thailand, have been designated as "free economic zones" for China. These zones host Cambodia's largest casinos, accessible without officially crossing the Cambodian border.

The "casino strips," featuring a variety of gambling establishments and premium hotels, are situated in the buffer zone on the countries' border in places like Poipet, Bavet, and O'Smas. In a small 2-kilometer section of the border zone in Poipet, there are seven casinos and several hotels. Since gambling is prohibited in neighboring countries, tourists from Thailand, Vietnam, wealthy Chinese, Vietnamese, Laotians, Europeans, and Americans visit these buffer casino zones. These gambling establishments contribute an average of $30-35 million in government revenue annually. If the project to build hotels, entertainment centers, and casinos in Sihanoukville is realized, the income is expected to double. Major casinos generate about $2 billion for their owners, typically large foreign companies. Money laundering schemes and bribery flourish in the free zones, leading to the presence of "fraud factories" that the government overlooks, with some groups only neutralized due to intervention from foreign media, human rights activists, and politicians.

Slavery in Casinos and Quasi-Factories: A Concerning Trend in Cambodia

In autumn 2022, Forbes reported a California resident falling victim to an online fraud orchestrated by Cambodian criminal gangs known as "quasi-factories," resulting in a $1 million loss in a "pig butchering scam"—a scheme where scammers build a long-term relationship before convincing victims to invest in cryptocurrency.

Perpetrators often reside in Cambodia's free zones, attracting individuals from neighbouring countries, such as Malaysia, Vietnam, Thailand, and Laos, under promises of good income. However, many end up in slavery, coerced through threats to operate fake accounts and engage in fraudulent schemes. Various forms of slavery persist within free zone territories.

Following a downgrade in Cambodia's ranking in the annual Trafficking in Persons report by the US State Department in July 2022, the Cambodian government intensified efforts to combat such crimes. The report highlighted a lack of investigation and prosecution of officials involved in numerous reports of complicity in human trafficking.

It remains uncertain whether the Cambodian government can neutralise criminal groups around local gambling establishments and establish fair, responsible gaming in both free zones and the country.

Prospects

Despite challenges, Cambodia remains a favoured destination for gambling enthusiasts, especially drawing tourists from China and Japan. Plans for charter flights from Chinese cities to Sihanoukville casinos are underway, and Chinese investors aim to build a high-speed railway connecting Phnom Penh to the Vietnamese border where casinos are situated. Additionally, China plans to implement the "One Belt, One Road" project, linking the borders of Vietnam, Thailand, and the southern coast of Cambodia through a high-speed rail. Infrastructure expansion could attract more tourists, potentially transforming Cambodian casinos into places for safe and fair gaming, aligning with international responsible gaming rules.