Cambodian casino operator NagaCorp Ltd. posted a net profit of $172.6 million last year, a 27 per cent increase over the previous year, attributing the surge to increased business volume across all gaming segments at its NagaWorld casino complex in Phnom Penh.

Gross gaming revenue (GGR) increased 26 per cent to $480.6 million in 2015, the Hong Kong-listed firm said in a filing on Monday.

The strongest growth was in the mass market segment, which saw a 33.4 per cent surge in GGR in 2015 compared to a year earlier, pulling in $257.7 million as a result of the formidable 22 per cent win rate at NagaWorld’s public tables.

VIP year-on-year growth was a more moderate 18.5 per cent in 2015, with a 2.8 per cent win rate generating $222.9 million.

NagaCorp said increased tourism to Cambodia resulted in more visits to its property, while more convenient gaming options led to incremental growth during the second half of 2015.

“The business volume growth is attributable to steady visitor growth to the property and successful operational efficiencies implemented to improve convenience for players at the gaming tables and EGMs [electronic gaming machines],” the company said.

In July, NagaWorld implemented a new option that allowed players to buy-in at all public floor tables, whereas previously they were required to purchase casino chips only at the cashier cage. Similarly, the casino installed an automated ticketing system on most EGMs in September that improved payout options.

The changes contributed to growth in public floor table buy-ins and EGM bills-in, up 18 per cent and 16 per cent, respectively, it said.

Further boosting EGM revenue, which finished the year up 62 per cent at $136.5 million, was the addition of 269 EGMs in the second half of the year, as well as a negotiation fee of $40 million paid by a group of investors in a partnership to operate them. The casino now has 1,656 EGMs in place.

NagaCorp’s continued push into the lucrative VIP market has paid dividends, with high-rollers proving to be more adept gamblers, but also playing with much higher stakes and, ultimately, seeing bigger losses. VIP rolling chip turnover jumped 27 per cent in 2015, compared to a year earlier, to $7.9 billion.

The company attributed its VIP traffic growth to a successful junket program, having signed on junket operators to funnel high-rollers to NagaWorld. Last June, the company struck a deal with Hong Kong-listed Jimei International Entertainment Group Ltd to fill and operate at least seven VIP gaming tables at the casino.

“The overseas junket incentive program introduced in March 2013 has since enabled the group to increase existing table limits while managing volatility and credit risk,” the company said.

Some of this traffic is undoubtedly the product of China’s two-year-old anti-corruption campaign, which has battered Macau’s gaming revenues and pushed wealthy Chinese gamblers to seek alternative offshore destinations. NagaCorp noted that its Cambodian casino’s 26 per cent surge in GGR last year coincided with Macau’s 34 per cent decline in aggregate casino GGR.

The company said the continued downturn in Macau’s gaming sector “offers opportunities for the group to further penetrate the regional gaming market of both the VIP and mass market, by offering better commercial terms to junket operators and agents as a result of NagaWorld’s low cost structure”.

Michael Ting, a Hong Kong-based gaming research analyst for CIMB, said NagaCorp has continued to expand its revenue stream while prudently trimming overheads.

“They’ve been pretty good in terms of reducing operating expenses in 2015,” he said. “They made operational enhancements . . . and reconfigured the property to make it more attractive for VIPs. All those things added up to drive profit growth.”

Ting said he expects the company’s revenues to continue on an upward trajectory given Macau’s ongoing troubles and Cambodia’s growing air connectivity to China. Moreover, NagaCorp’s gaming and non-gaming revenues should climb with the opening of its NagaCity Walk retail addition later this year.

“Anytime you have a big retail area within a property it helps attract people to that property and, more importantly, keeps them there longer,” Ting said. “And the more likely they are to play at the tables, the more likely they are to lose.”

NagaCorp’s highly favourable tax structure ensures the Cayman Islands-registered company retains a large chunk of its winnings.

The casino pays a fixed amount in taxes each month to the Cambodian government, amounting to $365,322 per month on gaming operations and $214,338 per month on non-gaming earnings in 2015, according to its financial statement.

The arrangement allowed NagaWorld to pay just $6.9 million in taxes on $327.8 million gross profit last year, an effective annual tax rate of just 2 per cent.

Critics have blasted the government for its preferential treatment, pointing out that most other corporations in the Kingdom are subject to a standard 20 per cent tax on profit.

Son Chhay, chief whip of the opposition Cambodia National Rescue Party, told the Post last month that the government was dragging its feet on legislation to regulate the casino sector, and was unlikely to apply the standard corporate tax rate.

“They will come up with fees that casinos have to pay rather than a tax structure, which opens it up to corruption,” he said.