Cambodia now picks up the slack
Will Vietnam finally allow its own citizens to gamble in the country’s casinos? Speculation about casinos entry to casinos is hot on the heels of new casino project approved for Phu Quoc, the country’s largest island.
According to Radio Free Asia, some analysts and many potential investors are calling on the government to legally allow the Vietnamese to gamble simply to keep their gaming dollars at home. Some Vietnamese get around the regulations—in certain cases, by bribing their way into casinos at home—but others travel to places like Cambodia to play. Currently, only foreign passport-holders may legally gamble in Vietnam.
Bui Long Quan, a Vietnamese tourism industry expert, told RFA, “The first benefit of this project is we don’t lose money—not letting the money out of the country. Because if we let the Vietnamese go to casinos in Cambodia, Macau, Malaysia or other places, we let the money flow out.
“Casinos for foreigners mean nothing,” he said. “So the ban is impossible.”
But economist Pham Chi Lan says the potential windfall from a new casino will come at a cost, especially if locals are allowed to get in the game.
“The money we may earn from the Vietnamese who spend at casinos in Vietnam instead of the ones in Singapore or Cambodia may not be enough to compensate for the economic and social consequences brought about if gambling is widespread and legalized in Vietnam,” Chi Lan told the AP.
The Finance Ministry has proposed that the country’s residents be able to gamble under certain conditions: if they are 21 or older, if they can prove they are financially secure, and if they have no criminal record.
Phu Quoc is a special administrative economic zone and resort in Kien Giang Province in the Gulf of Thailand. The proposed new casino would be part of a larger tourism and entertainment complex. Tourism expert Tran Thi Viet Huong told ABC News that welcoming a new casino “will attract more tourists and infrastructure investment and create more jobs, which will bring more development opportunities.”
With a high barrier to entry for developers—Vietnam now requires a minimum $4 billion investment for casino resorts—allowing locals to gamble may be the incentive some investors need to jump into the market.
Union Gaming Securities Asia analyst Grant Govertsen has said he does not expect “much (if any) interest on the part of the major gaming companies unless two or three important conditions are met: 1) locals gaming, 2) licenses granted in the major cities of Ho Chi Minh and Hanoi, or 3) the minimum investment requirement is lowered substantially to a number less than US$1 billion.”
If locals are not permitted to play, developers would likely be looking to invest “significantly lower than US$1 billion,” Govertsen added.
As the debate continues, interest is growing in the Phu Quoc site. According to the Kien Giang Department of Culture, Sports and Tourism, 600,000 visitors came to Phu Quoc last year, up 37 percent compared to the year earlier. Foreign travelers made up 55 percent of the total, the
Saigon Times Daily reported. A local investor may be already in the running, but that investor has not yet been identified.
As Vietnam considers its path, gamblers who no longer play in Macau are patronizing casinos in South Korea and the Philippines, according to a recent note from Deutsche Bank; for that reason, the bank says GGR in Macau will shrink by 8 percent this year. “Weakness in big markets means opportunities for mid-sized markets as Chinese gamblers travel farther to try new destinations,” the note said. Deutsche Bank predicts that gaming revenue in Philippine casinos will grow by 33 percent this year and South Korean casinos will grow by 16 percent.
Meanwhile, the international shuffle of high-rolling players also is helping the beachfront Grand Ho Tram Strip resort in Vietnam, which is attracting more outbound Mainland Chinese and Korean patrons, reports the Macau Daily Times. “They see a major opportunity with the current downturn in the VIP market in Macau: the opportunity to start growing that market in Vietnam. So a big target for them is to start looking at China, as well as the junket organizations and the VIP market here in Macau, and attract them to Ho Tram,” said Chris Wieners of Hogo Digital, marketing agency for the property. Due to the influx, the Grand Ho Tram plans to add a new hotel tower in the coming year, doubling its inventory from 500 rooms to 1,000.
Forbes contributor Muhammed Cohen writes that Vietnam’s young population “with a propensity to gamble” and “a rising economic trajectory” make the country attractive to global developers, “especially with Macau casino revenue sputtering.
“But the government’s ban on gambling for its citizens unless they hold a foreign passport, and the demand for new licensees to invest US$4 billion to develop integrated resort complexes in remote areas, renders Vietnam largely forbidden fruit.”
Of Vietnam’s eight licensed casinos, the Grand Ho Tram, which opened in 2013, is the only integrated resort. But more are on the way. One, in Quang Nam Province south of Da Nang, is a project of Hong Kong billionaire Cheng Yu-tung’s Chow Tai Fook Enterprises, in partnership with VinaCapital and Macau junket promoter SunCity. It is set to open in 2019.
And last month, a group of investors led by local property developer Imex Pan Pacific Group announced plans for a project in Ho Chi Minh City, formerly Saigon. Imex did not shy away from that US$4 billion “magic number,” wrote Cohen. Investors associated with the project reportedly include architect Paul Steelman’s Steelman Partners and Weidner Holdings, headed by William Weidner, former president and chief operating officer of Las Vegas Sands LVS.
“LVS has been interested in Vietnam for years,” LVS Senior Vice President for Global Communications and Corporate Affairs Ronald Reese acknowledged. “(Sheldon) Adelson has been there multiple times and other members of our development team have visited on many occasions. Certainly not an interest that has transpired recently, it’s a market we’ve long pursued.”
Until Vietnam opens up, the Phnom Penh Post reports, Cambodia may continue to nab the lion’s share of Vietnamese gamblers. It is expected to lead the globe in terms of VIP gaming revenue growth on a percentage basis this year, according to the Morgan Stanley report. The bank projects that Cambodian casinos will post a 39 percent increase in 2016 VIP proceeds.
“As there is more diversification away from Macau for VIP junkets, peripheral markets in the region will come to Cambodia,” said Michael Ting, gaming analyst for CIMB Securities.
