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Laos Rolls the Dice on Casino Tourism

January 18, 2017

https://www.westernsydney.edu.au/ics/news_and_media/blog/laos_rolls_the_dice_on_casino_tourism

 

Published 12 July, 2016

 

Pick up any guidebook on Laos and you will likely find colourful descriptions of the country's rich natural beauty, cultural diversity and long Buddhist history.

 

From the smiling monks in the UNESCO-preserved temples of Luang Prabang to exotic hill-tribe treks in Luang Namtha, Laos is a country that has long ignited the imaginations of European and Australian backpackers seeking an 'off-the-beaten-track' experience of 'real Asia'.

But not all tourists come in search of such carefully constructed, orientalist, narratives. Some just come to gamble.

 

Asia on Tour
 

The Asia Pacific region is now the world's second most popular tourist destination. According to the United Nations Economic and Social Commission for the Asia Pacific (UNESCAP), tourist numbers to every country in the region (except French Polynesia), have increased markedly over the past decade. 

 

At the centre of this growth has been a continued rise in intraregional tourism, particularly from China. Indeed, from 2012 onwards China has accounted for around one-third of total outbound tourism in the Asia Pacific, while Asia's leading independent brokerage group CLSA predicts that by 2020 international tourist numbers from China will reach 200 million. 

 

In Laos, a 2014 statistical report by the Lao National Tourism Administration states that approximately 92 per cent of tourist arrivals came from within the Asian region, 422,440 of which were Chinese. This growing importance of non-Western tourism has been accompanied by both new tourist desires and new entertainment facilities targeted at the intraregional market. 

 

This is nowhere more evident than in respect to Asia's mushrooming casino industry. 

 

Asia's Gamble on Casino-led Growth
 

Since Macau first liberalised its casino industry in 2002 there has been a rapid expansion of gambling establishments within Northeast and Southeast Asia. 

 

In Cambodia there are now more than fifty casinos operating, in the Philippines billions of dollars are currently being invested into integrated casino resorts, in Japan and Taiwan parliamentary debates regarding casino legislation continue, and in Laos, Malaysia, Myanmar, North Korea, Singapore, South Korea and Vietnam, casinos have become an increasingly prominent features of tourism landscapes.

 

In Macau, its tourism expenditure accounts for almost 100 per cent of GDP, and in 2013 its thirty-five casinos produced gaming revenues totalling US$45 billion – more than seven times that produced by the entire Las Vegas strip. While recent crackdowns on corruption within Mainland China have seen gambling profits suffer, the city-state's gaming industry has nonetheless allowed for massive investment into social services and public infrastructures. In 2016, Macau's 600,000 residents enjoy the world's fourth highest life expectancy and GDP per capita indices.

 

In Singapore, its two casino resorts of the Marina Bay Sands and Resorts World Sentosa have also recorded combined 2013 profits exceeding the Las Vegas strip, and have played a pivotal role in the country's rejuvenation as a 'must-see' luxury Asian destination of highly ordered investment and consumption.

 

Yet, in Asia and elsewhere, casinos have also been heavily criticised for their association with immoral behaviour, problem gambling, corruption and organised crime. While Macau and Singapore highlight the potential of casinos to bring rapid socio-economic progress, gambling establishments in Southeast Asia's least developed countries have often faced scrutiny for their association with state and corporate cronyism, violence, prostitution, land displacements, trafficking networks and political tension.

 

Casinos in Laos
 

For more than a decade a central development strategy of the Government of Laos (GoL) has been to promote regional connectivity by upgrading transnational infrastructures and establishing new trade, tourism and investment hubs. From at least 2007 an important component of this strategy has been the approval of three large-scale, foreign-owned casinos – of which two have already been shut down. 

 

The first closure, at the Royal Jinlun Hotel and casino complex on the China-Lao border of Luang Namtha province, came in 2011 following media reports on the unlawful detainment, beating and murder of Chinese tourists. Situated within the 'Golden Boten City' Special Economic Zone (SEZ) and financed by investors from Hong Kong, the Royal Jinlun casino was once part of a booming border town where gambling, prostitution and the illegal wildlife trade drew thousands of Chinese tourists daily. Today, however, the town's apocalyptic landscape of unfinished buildings, burnt out vehicles, overgrown grass and wandering livestock are emblematic of the highly speculative nature of casino investment.

 

                                                                                    Golden Boten City 

 

 

Just a year later, in 2012, the GoL seized Laos' second large-scale foreign owned casino complex – 'Savan Vegas' – on the basis of claims that the establishment had unpaid taxes. This acquisition was quickly followed by counter claims from the casino's Macau-based financiers, Sanum Investments Ltd., who accused the GoL of corruption and filed an arbitration case with the World Bank's International Centre for the Settlement of Investment Disputes. 

 

Clearly, the closure of Savan Vegas and the Royal Jinlun casino were the result of very different circumstances. Yet, in both cases it is evident that the GoL has found the governance of casinos difficult. Indeed, according to the once acting Director of the International Relations and Cooperation Division for the Lao National Committee for Special Economic Zones, Miss Malaykham Sayakone, the experiences of Savan Vegas and Royal Jinlun have led the Lao government to decide that: 'No more casinos will be built until they can be reformed'.

Given the troubled history that Laos has had with casinos, this seems a wise decision. However, as the continued operation of the already-built Kings Roman casino also makes clear, the GoL has not yet completely given up on casino tourism.

 

Betting on Kings Roman
 

Of the three large-scale casinos built in Laos during the past decade, by far the most successful has been Kings Roman. Situated in close proximity to China, Myanmar and Thailand, this grandiose establishment forms the centerpiece of Bokeo province's Golden Triangle SEZ – which the GoL hopes will one day become a regional tourist hub of restaurants, hotels, commercial buildings, a 36-hole golf course, international airport and even a motor racing stadium.

 

Built with funding from Hong Kong, Macau and Yunnan, Kings Roman's decorative golden crown and surrounding statues of Athenian gods present a simulacrum of wealth and aristocracy that appears strikingly out-of-place in a landscape of rice fields, banana plantations and thatched houses. Inside the casino's ornately decorated entrance two large central gaming halls are flanked by multiple VIP rooms and a small number of slot machines that are left empty by the majority of patrons, who come only to play Baccarat. 

 

As in Macau, the atmosphere at Kings Roman is primarily targeted at VIP gambling and is more focused than festive. No music plays, no alcohol is available and most punters show little emotion whether winning or losing. Many high rollers send paid representatives to place bets on their behalf through audio headsets or come only for a few days – accessing the casino through a special 10-day SEZ border pass that enables them to travel from Thailand's Chiang Rai airport in private limousines. 

 

Still, by 2015 the Kings Roman casino and surrounding Golden Triangle SEZ had received more than US$644 million in investment and produced more than half the total state remittances generated from all SEZs in Laos. This is a significant economic achievement for a part of the country that was not so long ago one of its most remote and poorest regions. 

 

However, such wealth has not come without its costs.

 

 
Counting the Costs of Casino Profits
 

Casinos have never been prized for their virtue and morality. From Las Vegas to Monaco and Macau, at least part of the appeal of gambling establishments has been their association with lewdness and debauchery. This is also true of Kings Roman, which has become intertwined with the Golden Triangle's narcotics and money laundering networks, gemstone smuggling, endangered wildlife trade and prostitution.

 

Unable to compete with the luxury and glitz offered to VIPs in Macau and Singapore, Kings Roman has used vice and hedonistic pleasures to attract its VIPs. Prostitution is widely available in surrounding hotels and, as has been detailed in a saddening report by the global non-profit organisation the Environmental Investigation Agency, endangered animals including bears and pangolins are available for consumption in nearby restaurants. Perhaps most depressingly of all, directly opposite Kings Roman are a large number of tigers caged in squalid conditions that, according to an anonymous casino employee, are killed and eaten for a price. 

 

Reports of casino-related acts of unlawful detainment, physical beatings and even murder are common amongst proximate residents of Kings Roman and, while the main targets of these crimes have been Chinese gamblers, such acts have created a pervasive state of fear in local communities. Casino security vehicles marked with Chinese characters patrol the Golden Triangle SEZ around the clock and CCTV cameras are everywhere, yet for many local people the feeling created by such surveillance is more of militaristic oppression than of safety.

 

                     Abandoned vehicles and overgrown grass surround the deserted Golden Boten City site

 

 

Furthermore, the swelling of Chinese tourists and migrants to the SEZ has also been a point of tension for many local residents, who feel marginalised by their northern neighbour's growing presence. Jobs available to local residents have generally been the lowest paid and have included exploitative working conditions. Indeed, according to GoL figures, of the 6347 people currently working in the SEZ, just 208 are Lao citizens. 

 

Loss of land, deforestation, and the pollution of natural environments have also become increasingly common following the establishment of the casino-SEZ, undermining the ability of nearby farmers to continue their diversified livelihood practices and forcing them into precarious forms of labour such as prostitution. This has led to emergence of new health risks, including the spread of HIV/AIDs and other communicable diseases. Residents that have been forcibly displaced from their land have made claims they were not adequately compensated and the destruction of an ancient Buddhist temple that was too old and fragile to be relocated has created considerable local unease.

 

             A young boy walks the muddied streets of a large Burmese slum settlement at the Golden Triangle SEZ         

 

 

Perhaps the greatest impact the casino has had on residents, however, has been the loss of family wealth and assets through gambling. Laos has no public awareness campaigns targeting problem gambling or support systems for gambling addiction and, in a country where GDP per capita is just US$5000, many have paid a high price to learn the house always wins. As one local resident explains:

 

'Together we [him and my other chaperone] have lost more than US$100,000. I used to have three cars but I was forced to sell two of them. I also sold my house and US$25,000 worth of rubber trees'.

 

In less than a year, this father of six children had lost the majority of his family's assets. And yet, his situation was not as serious as that of others from his village:

 

'One of my friends committed suicide because he lost all of his family's money. Another friend that is a police officer told me that they found a woman in the forest who had been tied up by her arms and left [to die] because she owed the casino money'.

 

Such stories, while difficult to verify, have even affected residents that have never visited the casino. Speaking the previous day with a local shop owner and long-term resident of Houay Xai, the closest Lao city to the casino, I casually mentioned my intention to visit Kings Roman. Shaking his head, he replied:

 

I will never visit the casino! The casino is no good. People can win some money there but mostly they lose everything. They [patrons] see all this money and think they will be rich. But I am worried these people will steal from us so that they can go [to the casino] again.

 

Of course, such problems are not only restricted to Laos. In Myanmar, where more than 100 casinos once operated, media reports have also linked gaming establishments to narcotics syndicates, reports of kidnappings and other illicit activities. In Cambodia, ethnographic research by Chulalongkorn University's Dr. Thanyathip Sripana at the country's casinos details casino-related suicides, kidnappings and beatings. In Macau, Sheyla Zandonai has argued that casino industries have undermined the livelihoods of small and medium enterprises, Li Sheng and Yanming Tsui have suggested that an uneven distribution of casino wealth has caused 'serious social division', and Lo Shui Hing has demonstrated a relationship between casino gambling, money laundering and criminal violence.

 

Consequently, whether, how, and in what ways, casinos may be beneficial or destructive to national socio-economic development and community wellbeing remains the subject of much debate.

 
Rags to Riches or Riches to Rags
 

Whether or not the Kings Roman casino will fulfill the dreams of its investors and the GoL by becoming a catalyst for urbanisation and economic growth remains to be seen. The experiences of Macau and Singapore suggest that casinos do have the potential to bring exceptional economic development and, according to Dr. Danielle Tan – a leading academic expert on Laos' casino's – the GoL has learned several lessons from the 'shambolic experience' of its previous experiments with casino SEZs. It has increased its control over casino operations, improved security and established itself as a 20 percent shareholder to directly recover profits. 

 

Yet, while Laos' casinos have demonstrated some 'spin-off' effects for local economies, they have also resulted in growing socio-spatial inequalities, worker exploitation, violent crime, prostitution and the large-scale forced displacement of low-income communities. In a context such as Northern Laos, where local communities are some of the poorest in Southeast Asia, the risk that casino-led economic growth will continue to have a detrimental effect on the wellbeing of local residents is severe. 

 

Perhaps what residents of the northern Laos need most is not a new gambling playground for Chinese VIPs, but greater access to health services, better state protection against elite land seizures and new education and employment opportunities.

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