Gambling now underground
Michael Kelly, executive chairman of the board of Asian Coastal Development Ltd. and the Ho Tram Project Company, tells the Vietnam Investment Review a gaming pilot program led by global operators could do much to assuage concerns about legal gaming for locals in the country
Kelly told VIR that Vietnam has all the ingredients to move beyond foreigners-only gaming and enjoy a real economic boom. “Vietnam’s young population of about 90 million with a propensity to gamble—mainly underground or across the border in Cambodia—and a rising economic trajectory makes the country very attractive to the international gaming industry, especially with Macau casino revenue sputtering,” he said. “But the government’s ban on gambling for its citizens unless they hold a foreign passport and demand for new licensees to invest US$4 billion to develop integrated resort complexes in remote areas renders Vietnam largely forbidden fruit.”
Vietnam has just one integrated resort, ACDL’s Grand- Ho Tram, which opened in 2013 two hours from Ho Chi Minh City. A second IR is in development in Quang Nam Province south of Da Nang; it is being developed by Hong Kong billionaire Cheng Yu-tung’s Chow Tai Fook Enterprises in partnership with VinaCapital and Macau junket runner SunCity. The resort is due to open in 2019. The remaining eight licensed casinos and a handful of slot clubs generate an estimated US$300 million in annual gaming revenue, “a fraction of what would be possible with local play in urban centers,” Kelly said. “As things stand, Vietnam’s possibilities dwarf present realities and flashy proposals are bound to turn thoughts to what might be in the cards.”
Asked about possible negative social repercussions, Kelly said gambling is ongoing now, “underground, in illegal formats, and in terms of a very active cross border trade into Cambodia, Singapore, and Macau.”
His proposed pilot program, which would educate officials and operators about the benefits of an open, legal and fully regulated locals industry would “bring gaming into the light.
“We should look at a pilot scheme as an opportunity for the government to better understand the gaming behaviors of its citizens in a controlled, secure, and regulated environment,” Kelly said. “We know that right now, there is an extensive underground gaming industry and a huge amount of capital flight to other jurisdictions from Vietnamese players. Running a pilot scheme will allow the government to prevent this capital flight, tax the revenues of gaming, and understand the behaviors, demographics and socioeconomic status of its players. The Grand Ho Tram Strip checks all the boxes and is ready, willing, and able to work with the government on this pilot scheme immediately.”
Interestingly, Kelly advocates integrated resorts outside large cities, saying the approach is “the best and safest way for casino gaming to be implemented. Setting up outside of metropolitan areas has an assortment of ancillary benefits for regional areas, as they help to create critical mass for other tourism attractions. They assist the development of economic growth for the region and generate employment.”
Ho Tram employs more than 1,500 people, he pointed out, and added that the integrated resort model “helps to foster new development, spur new infrastructure, new job growth, and promote other regions by creating clusters of activities spurred by foreign direct investment. The pilot allows the government the opportunity to regulate the gaming industry from a control perspective, monitor economic growth, and allow gaming to become an economic growth engine.”
