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Cambodia’s new law on commercial gaming
The casino industry is both exciting and complex. Capable of generating astronomical revenues, highly profitable for governments, casinos are frequently at the heart of scandals and are blamed for the many social problems they cause. This is also the case in Cambodia, which is one of the countries with the most casinos in Southeast Asia. However, gambling has actually been illegal for Cambodian citizens since 1996 because of the social problems it can cause.
This means that only foreigners can engage in these activities. Casinos generate millions of dollars in taxes every year (USD 40 million in 2020) and create massive employment opportunities for Cambodians.
Until very recently, there was no legal framework for these projects other than a ban on online gambling, however, this recently changed.
The first Cambodian Law on Commercial Gambling
In November 2020, a long-awaited Commercial Gaming Management Law (the “Gaming Law”) was enacted to provide a comprehensive legal framework for the gaming industry in Cambodia, from casino games to games of chance and, in general, all betting games that involve some sort of monetary benefit.
These are the three types of commercial gaming covered by this regulation.
The law thus sets out a clear licensing regime and also provides a legal framework for determining prohibited and non-prohibited zones for these types of activities.
New tax obligations have also been included in the law (from 4% to 7%) as well as restrictions on who can engage in this recreational activity such as minor, financially or mentally incompetent individuals
While this 12 chapters law is the main body for the regulation of commercial gaming in the Kingdom, it has been and will continue to be supplemented by Prakas (ministerial decisions) and decrees.
Indeed, in August 2021 two sub-decrees were issued by the government to establish a new regulatory body, the Cambodian Commercial Gaming Commission (CCGC), to deal with licensing issues, issue guidelines, propose new regulations and resolve disputes. Furthermore, the decrees introduced new minimum capital requirements for casino operators.
More recently, new regulations have been added to the original text to ensure its effective implementation regarding management issues, procedures and penalties.
What are the recent additions to the Gaming Law?
Prakas No. 009 on Management of Game Rules, Game Equipment and/or Game Software for Casino Operations
The main objective of this ministerial decision is to ensure that all casino gaming activities are transparent and conducted in a decent manner.
The main features of this prakas are that gaming equipment and software as well as types of games and rules are subject to registration. The prakas therefore provides for an application procedure for this purpose. In addition, under this regulation, all equipment and software used in casinos must be manufactured by companies licensed by the CMGC.
As mentioned above, the types of games and rules must be approved in advance by the CMGC. Once approved, the games must be operated by licensed staff and the rules must be clearly visible on the casino premises and at the place where the games are played.
Important to note : under a directive issued in March 2022, persons operating commercial gaming activities under the Gaming Act must submit an application for registration of their types of games/rules and equipment by 30 September 2022.
Prakas No. 001 on formalities, procedures and conditions for the development of Integrated Resort
This Prakas is a key element of gaming regulation, as it provides a framework for the development of integrated resorts, which are usually large-scale projects, both in terms of size and funding, and therefore require careful monitoring.
Among a number of requirements are a minimum capital of approximately $500 million and a deposit of at least 5% of the company’s assets. The development of the project will also have to be done in accordance with a so-called “development agreement” signed with the CGMC.
The rest of the Prakas consists of technical details such as master plans, feasibility studies, legal and fiscal obligations, licences, etc.
Sub-decree on penalties for infringement under the Gaming Law (May 2022)
This instrument classifies infringements under the Gaming Law into four categories, with corresponding sanctions for each category.
The first category of infringement is for those regarding the operation itself such as operating with unvalid or expired licence.
Then comes infringements regarding the turnover of the operation such as not declaring revenues to the CGMC.
The sub-decree also provides for a number of penalties regarding the obligations of the operators and stakeholders of the project. These include a failure to prevent restricted people from entering their venue, failure to make payment to game winners but also more technical penalties regarding security equipment (voice and video recordings), audit reports and financial records etc.
As this category is particularly comprehensive and detailed, it is imperative to have a thorough knowledge of the subject. Implementing all of these measures to ensure that one’s establishment complies with all of these rules requires significant resources and appropriate expertise.
In conclusion
Gaming laws protect consumers and the integrity of the gambling industry, including preventing cheating and fraudulent practices.
It is also well known that casinos can quickly slip into criminality due to the amounts of money involved, hence the need for a strict regulation. In addition, these amounts means the possibility of great tax revenues.
Cambodia has been slow to implement such a law, but it is now in place and the authorities seem to be taking the issue seriously with the regular publication of decrees to enrich the original text.
To find out more about setting up and operating a business in Cambodia, why not book a consultation with one of our experts. Additionally, you can take a look at our accounting and secretary services for Cambodia here.
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