Saturday, August 13, 2022

Locals gaming underwhelms


Vietnam’s hotly anticipated locals gaming program has got off to a slow start, with remote locations and red tape cited as key factors in deterring visitation.

The government announced in 2017 that it would allow locals to gamble in a three-year pilot program to assess the impact on its nationals. The conditions were a minimum age of 21 and a minimum monthly salary of at least $445. It also said only integrated resorts fulfilling a $2 billion investment criteria would be selected.

At the time, the announcement was widely seen as being a game-changer for integrated resorts in Vietnam, potentially attracting much higher levels of foreign investment. Many of the larger operators, such as Las Vegas Sands, have publicly stated they will not invest in jurisdictions which don’t have local support.

Since then enthusiasm has waned. The government restricted the program to just two IRs, one on Phu Quoc island in the far south, and one that is still not completed in Van Don in the far north.

The Corona Casino & Resort opened in January this year. The five-star property features hotels, a golf course, spa, safari park and an amusement park, as well as a convention centre and bars and restaurants. 

The casino spans 18,800 sq m over two floors and features 100 tables, 1000 slot machines and 843 electronic gaming machines. It has 32 fusion roulette machines, as well as stadium-style games. It has a VIP casino on the 8th floor with views of the coast.

The resort is said to be doing swift business on the non-gaming side, but the casino has not been flooded with players from Vietnam. 

“Vietnam has promoted gaming on Phu Quoc but statistics show more people are getting on planes to Phnom Penh, or are driving up to Bavet, than are flying down to Phu Quoc,” Tim Shepherd, director of Fortuna Investments said at the Mekong Gaming Summit in September. “It seems that putting casinos that allow locals in far remote locations and expecting locals to go there does not at this point seem to make sense, though it’s early days.”

Part of the problem may be the lack of clarity in terms of what a Vietnamese citizen needs to produce to access the casino. 

“By all reports participation has been somewhat limited,” Matthew Landry, managing director of Strategic Market Advisors said. “My understanding it’s still not clear what documents you need. One entrant submitted one document that was circulated, passed around and then denied and then another was given and he was admitted in a process that took 20 minutes to half an hour. That’s not the customer experience that you want to see.”

Corona’s website lists six ways a local can provide proof of minimum income. These include “a certified copy proving the monthly income, monthly payroll or pay decision issued by the player's employer within the last 3 months from the date on which the player gambles at the casino, demonstrating the player's monthly income exceeds 10 million Vietnam dong, or a certified copy of a lease on a house or properties held by the player is also valid according to the regulations if it demonstrates a total monthly rental exceeding 10 million Vietnam dong.”

Despite the slow start, a more recent visitor said traffic appears to be picking up, with the word starting to get out to local Vietnamese.

There is greater optimism about the second project that will be open to locals in Van Don, though at present progress appears to have stalled. The Van Don project is close to the Chinese border, so is likely to receive support from Mainland Chinese. 

It is also close to the World Heritage Site of Ha Long Bay, which is already a popular tourism destination in itself.

However, there is still no clarity on when the resort will be completed. 

“It will be interesting to see what happens in Van Don,” Landry said. “It’s a bit further north and we will have a little bit better access for a domestic population as well as foreign players.”

Landry said there had been concern about lease terms and taxation of both the project and the wider economic zone nearby and he didn’t see any immediate prospect of progress.  

Although foreign investors had been keen for Vietnam to open its doors to local gaming, the key motivation for the government was to help stamp out illicit gambling at home and to bring back some of the money being lost by Vietnamese crossing the border to play. One study has said that the country may be forfeiting about $800 million a year to casinos in Cambodia.

There had been speculation many of these border properties would not be able to survive if Vietnam allows locals into casinos at home, although so far there appears to have been little to no impact. 

Longer term, industry participants are confident the government will continue to support the growth of IRs in Vietnam and will potentially expand the pilot program to cover other properties in the country.

“The idea of an integrated resort is very well aligned with Vietnam’s long-term aspirations to grow its tourism industry and I think resorts like Ho Tram are extremely popular from a tourism perspective,” said Maxfield Brown, manager, business intelligence, at Dezan Shira & Associates. “If the Vietnamese government can figure out a way to syphon out some of the illicit gambling that is going on into these IRs and prevent the local population from being harmed, which I think they can, I am fairly confident they will grow with the IR model.”

In the meantime, strong tourism arrivals, coupled with business investment from China, Korea and Japan is expected to support Vietnam’s casinos.

“Factory owners moving to Vietnam and then working there become your natural players,” Shepherd said. “That’s the correlation between investors and an uptick in gaming revenue.”

 

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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