Phnom Penh’s NagaWorld casino posted a massive increase in profits and revenue driven by strong growth in high-value guests last year, with the amount of money gambled by VIPs at the capital’s only casino exceeding Cambodia’s gross domestic product for 2016.

NagaWorld’s parent company, NagaCorp, is listed on the Hong Kong stock exchange and released its annual financial report for last year, showing an 85 percent increase in gross gaming revenue (GGR) to $926 million, as well as a 39 percent increase in net profit to $255.2 million.

The casino saw the largest growth in its VIP operations, where “rollings” – a term referring to the amount bet by gamblers – increased by 142 percent to $21.1 billion.

That is more than the value Cambodia’s 2016 GDP, which was $20.02 billion, according to the World Bank.

NagaCorp reported paying $8.12 million in income tax last year, an effective tax rate of 0.87 percent based on the company’s GGR.

Cambodia has one of the lowest effective tax rates in the world for casinos. A 2015 report from accounting firm PricewaterhouseCoopers noted that Macau had a 35 percent tax on GGR, while Australia had a rate of between 10 and 45 percent, and Singapore had a rate of between 5 and 15 percent.

Ros Phirun, deputy director-general of the Finance Industry Department at the Ministry of Economy and Finance (MEF), said yesterday it would be difficult to explain how the ministry taxes NagaWorld.

“There are a lot of criteria in the agreement,” he said. “The agreement is written in a very thick book, so it is not easy to explain just [over the phone].”

In 2016, NagaCorp had to pay the ministry more than $15 million in additional tax payments after a government audit of its 2015 finances found “discrepancies”.

Last year’s $8.12 million in income tax consisted of monthly payments totalling $676,700 made to the MEF. The paid income tax was smaller than the $11.7 million performance bonus that NagaCorp CEO Chen Lip Keong was entitled to, according to the report, though it added that the company’s head deferred his 2017 bonus.

NagaCorp’s performance was boosted by Cambodia’s uptick in arrivals from China, which jumped more than 40 percent last year to 1.2 million visitors. VIP gaming revenue led the GGR growth, and totalled $625.3 million, more than double the revenue brought in from mass market gambling, which came out to $300.6 million.

But gross profits from the VIP sector were only $153.9 million, about half of the $294.3 million in profits that came from mass market gambling. Costs associated with VIP customers and a lower win rate for the casino resulted in a profit margin of about 25 percent for VIP gaming, compared to a 98 percent profit margin for mass market gaming.

That meant that while NagaCorp’s profits rose, its overall gross profit margin decreased from 69 percent in 2016 to 49 percent last year.

The company’s report also touted the November soft launch of Naga2, a second complex featuring gaming and other amenities that would allow the company to expand its operation in Cambodia and handle additional visitors.

Additional reporting by Hor Kimsay