GGR taxed at 35 percent
The government of Vietnam may be warding off investors enthusiastic about the country’s gaming industry. According to analysts, existing regulations and a ponderous legislative process could limit or delay the country’s potential as a thriving gaming jurisdiction.
Under current law, Vietnam requires new casinos to be located in integrated resorts with a total minimum investment of $4 billion, so as not to seem too gaming-centric. The government also does not currently permit casinos in central Hanoi or Ho Chi Minh City.
Moreover, gaming halls must pay gross gaming revenue tax of 35 percent, according to the Asia Gaming Brief. The country has also limited the player pool by allowing only holders of foreign passports to enter casinos and electronic gaming halls. Though investors are hopeful these rules will change, it may not happen in the near future.
“Due to the recent political changes across senior government positions, the gaming expansion debate will likely be placed on the backburner,” said Shaun McCamley of Global Market Advisors. “My feeling is that the locals’ gaming issue will not be on the agenda until late Q4, or even early Q1 in 2017.”
“We see this in jurisdiction after jurisdiction,” added Union Gaming analyst Grant Govertsen. “They want the benefits associated with foreign investment, tourism, etc. but can’t seem to get across the finish line in terms of a legislative solution.”
However, some projects are moving forward. The 541-room Grand Ho Tram Strip, which opened in July 2013, is now expanding. Harbinger Capital Partners owns a majority stake in Asian Coast Development, which owns the Ho Tram Grand project with minority partner Pinnacle Entertainment. The Grand Ho Tram recently signed a memorandum of understanding with Cotec Construction to build a $75 million expansion of the complex, adding 559 rooms for a total of 1,100.
The Banyan Tree Group is investigating the possibility of siting a casino at its Laguna Lang Co property on the central coast, but has received no government approvals to date. And Sam Sheng, managing director of Double Square Consulting of Macau, has said he is viewing sites for a gaming property on behalf of private investors.
Govertsen says investors are likely to steer clear of investing in Vietnam while the regulations remain in flux. “The big operators are smart. There is no reason for them to commit billions of dollars in capital when the rules are likely to change at some point in the future. As such, we do not foresee any of the marquee gaming names going to Vietnam until the legislation is properly settled.
“Further, we do not think there will be notable interest on the part of the major gaming names unless the minimum capital investment requirement is slashed dramatically and/or locals are allowed to gamble,” he added.
At G2E Asia, Sheng said the “sweet spot” of investment for the Vietnam market now would be about $250 million, a fraction of the investment called for by government officials.
