Foreign Casinos Have Been a Disaster for Cambodia

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Foreign Casinos Have Been a Disaster for Cambodia

Beyond the government’s crack down on striking workers from the NagaWorld casino complex, Chinese-run gambling operations have brought a host of social ills.

Foreign Casinos Have Been a Disaster for Cambodia

The NagaWorld 2 Hotel and Entertainment Complex in Phnom Penh, Cambodia.

Credit: Depositphotos

On June 27, hundreds of Cambodian security personnel violently dispersed a group of striking NagaWorld casino workers, beating the mostly female crowd and leaving 10 people injured. Since December 2021, staff at the casino in Phnom Penh have engaged in organized strikes against layoffs at NagaWorld, which is Cambodia’s largest casino and one of the capital’s major employers. The strike and accompanying protests have resulted in the arrests of hundreds of protestors and raised the ire of government officials and state-run papers, who have wrongfully claimed that the worker strike was instigated by foreign agents. However, NagaWorld itself is not a native project: it is owned by Chinese-Malaysian businessman Chen Lip Keong and is publicly listed on the Hong Kong Stock Exchange. NagaWorld is just one foreign-owned casino among many that have produced a host of new social challenges in recent years.

Gambling and foreign-backed casinos are not new in Cambodia’s history. Foreign travelers have encountered Chinese-owned casinos in Phnom Penh as early as the sixteenth century. However, the gambling industry in Cambodia exploded in 2017, when Chinese-funded casinos took over the once-sleepy beach town of Sihanoukville and initiated an arrival of Chinese tourists seeking to gamble abroad, something that is illegal in China outside Macau. Sihanoukville was transformed by the influx of casinos and accompanying Chinese hotels, restaurants, and karaoke clubs, and Chinese nationals came to own 90 percent of businesses in the city.

The expanded Chinese interest in Cambodian gambling boosted the profits of NagaWorld, which since 2000 has enjoyed a monopoly on gambling within a 120-mile radius of Phnom Penh. Although the casinos exist only to serve foreigners – gambling is illegal for Cambodian citizens – Prime Minister Hun Sen supported the increase in Chinese investment associated with the gambling industry, arguing that Cambodians would “gain benefits” from the $1 billion in foreign direct investment that was funneled into Sihanoukville. While some local industries have benefited from the expansion of foreign casinos, two recent developments have decimated the gains Cambodians might have made: Hun Sen’s surprise ban on online gambling, and the impact of the COVID-19 pandemic.

In August 2019, just as brand-new casinos were opening their doors, Hun Sen announced a ban on online gambling, which had engaged a large portion of the foreign players in the industry and was the source a quarter of the tax that Cambodia earned from casinos. The move was described as a political one, by which Hun Sen was able to respond to worries about the crime associated with online gambling. This surprise change in policy, however, had an outsized impact. In only four months the market fizzled: half of the casinos in Sihanoukville closed, 7,700 local Cambodian workers were laid off, and 450,000 Chinese nationals left the country. Then, the pandemic hit, and foreign tourism – the source of essentially all casino customers – fell by 80 percent. Since the implementation of the online gambling ban and the advent of the pandemic, domestic revenue in the gambling industry has decreased by 90 percent.

Industry revenue losses due to COVID-19 and the gambling ban have exacerbated already egregious labor conditions. Foreign-owned casinos have been accused of numerous labor issues, including insufficient wages for Cambodian workers, poor working conditions, child labor, and attacks on union members, the latter of which has been intensified by the Cambodian government and media. Although much of the workforce supporting Chinese casinos is brought in from China, a tactic used by Chinese developers in many Belt and Road Initiative projects, many Cambodians have been hired as construction workers and casino staff.

Chinese casino corporations have adopted a system of “labor force dualism,” whereby artificial barriers related to wages and benefits are created between Chinese and Cambodian workers, resulting in drastically different treatment. According to labor researcher Ivan Franceschini, Chinese casino workers on average earn 4.5 times as much as their Cambodian colleagues for the same work. The low pay is exacerbated by the rising costs of living in Sihanoukville and Phnom Penh, making it difficult for locals to make ends meet.

Investigative reporting has shown that the conditions for workers in casinos are extreme and riddled with criminal enterprises. Cambodian authorities have exercised little oversight over new casinos; a recent World Bank report described the construction process as “build first, license later.” In August 2019, a hotel developed in conjunction with new casinos in Sihanoukville collapsed due to faulty construction and killed 28 Cambodians. The unregulated industry also saw an influx of child laborers in casinos, as well as increased numbers of sex trafficking cases concerning the new development and foreign worker inflows. While these violations in Sihanoukville have reduced due to the stall in casino development and the decrease in Chinese tourist arrivals due to the online gambling ban and the pandemic, signs of forced work at casinos remain. In October, allegations surfaced of a Chinese-owned casino confining 400 staff members in its building and forcing them to work during an outbreak of COVID-19.

NagaWorld is one of the few casinos in Cambodia where workers have union representation. However, workers participating in protests against NagaWorld allege both the corporation and the Cambodian authorities have specifically targeted those with union membership. According to the Labor Rights Supported Union of Khmer Employees of NagaWorld (LRSU) President Chhim Sithar, NagaWorld’s April 2021 plan to lay off 1,300 of their total 8,000 employees was “a clear attack” on union workers: Of the 1,300 workers selected for termination, 1,100 were union members. Sithar and LRSU’s vice president, secretary, and treasury were all given notices of termination. Now, many of those protesting layoffs have been arrested by Cambodian authorities for “endangering social security.” Police arrested President Chhim Sithar alongside 30 others in early January on incitement charges, and in March conducted a mass arrest of over 200 striking workers. Attacks against striking workers have continued, as shown in the June 27 crackdown. In addition to demonstrating the gaps in protection for workers at foreign-owned casinos, such arrests are a worrying sign of Cambodia’s weakening civil society.

Beyond the poor working conditions that the Cambodian government has allowed to fester, the expansion of the casino industry in Cambodia has had a negative impact on its surrounding environment and communities. Casino operations in Sihanoukville and nearby Koh Rong island have leaked sewage into surrounding waters and contributed to a massive increase in trash and construction materials littering the beach. Once a popular travel destination, locals and foreigners alike have refused to stay in the city now described as a “ghost town” ruined by constant construction and pollution. Despite the stall in active casino-goers, more casinos are being constructed across the country in 2022. Many of these new sites are developing in heavily forested areas, resulting in deforestation and displacement of local communities. One such development is occurring in Botum Sakor National Park, where the Chinese-owned company Tianjin Union Development Group (UDG) is constructing casinos and accompanying apartment buildings on 36,000 hectares of forest land. As of 2018, over 1,400 families were forced to relocate due to construction, and in in 2020, the United States Treasury Department sanctioned UDG for its “seizure and demolition of local Cambodians’ land for the construction of the Dara Sakor development project.”

While the Cambodian government has touted Chinese investment as being sum positive for the country, casinos have for the most part brought few benefits to Cambodian citizens, especially now that the pandemic and the ban on online gambling have undercut the sector’s profits. The newly developed casinos in Sihanoukville remain empty eyesores on the coast. Meanwhile, the established NagaWorld conglomerate is punishing union members, and more worryingly, is doing so with the strong backing of the Cambodian government.