Timeframe for Vietnam casino reform remains hazy

Foreign investors are still waiting for clarity on when Vietnam will pass a bill that is expected to reform the country’s gambling industry, opening the market to locals for the first time and potentially triggering a flood of foreign investment passage of legislation is keenly awaited by operators keen to enter the market, but who are wary of major investment in a jurisdiction solely reliant on foreign tourism.

A timeframe remains unclear and the bill appears to be lagging. Some experts had been optimistic that a revised decree would be ready for passage by the Prime Minister by the end of last year. However, nothing has been disclosed to date.

But some analysts remain confident a decision is on the drawing board.

 A senior gaming industry executive, who asked not to be named, said it may be a year before Vietnam nationals will be granted access to casinos.

"Is the Vietnam Government considering it seriously? Absolutely but it's not sure which way to go so it's a slow process!" the executive told AGB.

Grant Govertsen, a principal analyst with the Macau-based Union Gaming, also supports that view saying he was optimistic the changes would come soon, but added “these things take time and trying to ascertain a timeline is quite difficult.”

He said allowing locals to gamble will “create a significant amount of interest with respect to certain major international casino developers who “would be willing to spend billions of dollars in integrated resort (IR) development.”

“In fact Vietnam would represent one of just a few places in Asia where the major international casino developers would be willing to commit significant resources,” he said. The other obvious locations are Japan and Korea.

“These operators have already spent a considerable amount of time in Vietnam, meeting with potential local partners, scouting out locations,” Govertsen said in an emailed note. “They would likely be in a position to move quickly should positive changes be made,” he said.

Karl John, a senior analyst with London-based Asia Trade Experts, in an emailed note told AGB the Vietnam Government had been closely studying the move to open casinos to locals.

Hanoi is thought to be considering a pilot project to gauge the impact of allowing Vietnamese nationals into casinos before allowing a broader opening. The $4.2 billion Grand Ho Tram Strip resort, currently the country’s biggest, is hoping to be awarded a pilot license if and when the bill is passed.

“Locals allowed to participate with gaming is very important and we are working very hard with the government to have the first pilot license with Vietnam. Rather than the money leaving the country and going to places like Cambodia it’ll stay here,” Ho Tram President Shaun McCamley recently told AGB.

The move to allow local Vietnamese to enter the casinos would mark a reversal of official policy that banned residents and imposed harsh fines of up to VND200 million (US$9,246) on casino operators if locals were given access to gamble.

The Ministry of Finance (MoF) acts as the drafting authority for the Decree on Casinos. The sector is considered “a special and conditional business,” requiring proper management to avoid “potential negative impacts”.      

There are currently seven casino operators in Vietnam, while there are a further 40 to 50 slot clubs in international hotels, according to Donaco International, which owns the Aristo International casino in the northern province of Lao Cai.  

However, various provinces are already jostling for position to attract foreign casino investment ahead of the bill’s passage, with some analysts warning of the risk of excessive investment in the sector.

In anticipation of the reforms being announced as many as 10 provinces were racing “to win” a casino license in their region.

It is oikely that Vietnam would benefit from the reforms in the same way as Singapore has developed its gaming industry.

That’s because the bill is expected to set tough entry barriers for foreign investors, who are required to build large-scale integrated resorts that include malls, restaurants, and entertainment and include luxurious hotels. Initial investment costs are put at $4.0 billion with investors and operators needing a track record of at least 10 years experience in the casino business.

In comparison, other major casino localities such as the Philippines, Macau and Singapore have lower or no initial investment limits. In the Philippines, the investment threshold is set at $1.0 billion for casinos in Manila.