Asian casino operator Donaco International says it’s once again delaying the oft-delayed launch of its online gambling operations in Cambodia
On Thursday, the Australian-listed Donaco held its annual general meeting in Sydney, at which managing director Joey Lim revealed that “the initial launch of our online gaming business has been slightly delayed, and is now also expected in December.”
For the record, it’s been over a year since Donaco first revealed that it had been issued a Cambodian online gambling license. The product was supposed to launch in September, and then October, and then Lim told a Malaysian newspaper that the launch could take another “six to seven months,” only to refute that statement a week later and repeat the previous October target.
Whether or not Donaco makes its new December launch date remains unknown. What we do know is that the online operation will be run out of Star Vegas, Donaco’s flagship property in Cambodia, and that it will consist of “12 online gaming tables, to be operated by third party junkets.” At least, that’s what they told us in September.
LEGAL TIFF WITH FORMER THAI PARTNER HEATS UP
Donaco also used its AGM to reveal that it had commenced legal proceedings against a former Thai business partner, from whom Donaco acquired Star Vegas in 2015.
In August 2016, Donaco began managing a gaming room at the Star Paradise Hotel adjacent to Star Vegas, but when that contract expired this summer, the unnamed Thai vendor continued to manage gaming activity at Star Paradise without Donaco’s consent, which Donaco claims is a breach of their Star Vegas sale agreement.
In September, Donaco filed a cease & desist order against the Thai vendor, and Donaco said Thursday it has now lodged an application for an injunction against the vendor with the Cambodian courts, and “taken steps to initiate arbitration proceedings in Singapore.” Until these matters are resolved, Donaco has decided to withhold payment of the final vendor management fee for the Star Vegas business.
JUNKETS GIVETH, JUNKETS TAKETH AWAY
Lim also offered updates on the performance of both Star Vegas and Donaco’s Aristo International Hotel in northern Vietnam. Star Vegas has been undergoing a transition to a new set of junket partners, leading to VIP turnover being “well below” last year. However, VIP win rate is “well above” the theoretical rate of 2.85%, which helped offset the lower turnover “to some extent.”
The Aristo suffered the reverse problem, as VIP turnover is up 136% while win rate was an abysmal 1.34%. Compounding matters, Aristo’s casino visitation has fallen after Donaco was forced to cancel a marketing incentive that was “misused by some junket operators.”
Due to the above factors, group-wide earnings for the fiscal year-to-date are A$13.7m, but should have been A$5.6m higher on a hold-normalized basis.