The draft has raised high hopes among foreign investors in the casino business as, under existing rules, casino entry is limited to foreigners and overseas Vietnamese or Viet Kieu.

“We hope that this will be the last draft, already we have seen a lot of revisions before its submission in June,” Nguyen Huy Dat, deputy director of the Ministry of Finance’s (MoF) Lottery and Gambling Division, told VIR.

Another expectation among casino operators is that the total investment capital of a casino project would be cut from $4 billion to $2 billion, with a condition that disbursed capital must reach at least $1 billion.

“We took these issues into consideration when we composed the draft. However, the final decision will be made by the government,” Dat added.

Since drafting began in 2009, this decree has been subject to enormous controversy over whether or not the country should allow Vietnamese citizens to play at casinos.

In fact, long-delays in the approval of this decree has been a barrier to casino businesses entering Vietnam, as the regulation which bans locals from playing at casinos prompted them to game overseas, resulting in a loss of an estimated $800 million annually in much needed tax revenue for the country.

Unless the draft decree is approved, the government will not consider licensing new casino projects. This has made investors nervous. High hopes are now pinned on the potential of the market and the possibilities of easing the regulations by the government.

The $4 billion South Hoi An integrated casino resort kicked off in April 2016. Invested by a joint venture between VinaCapital, Macau-based SunCity Group, and Hong Kong-based Chow Tai Fook, it is the second largest casino in Vietnam after the $4.2 billion HoTram Strip resort and casino complex, located in the southern province of Ba Ria-Vung Tau. Ho Tram has recently signed a contract with CotecCons to invest an additional $75 million in expanding the complex.

“Casinos are our second biggest revenue maker after the hotel and resort businesses. Owning the largest casino venue in Vietnam, Ho Tram is waiting for the adoption of the decree to improve our casino business performance further,” said Michael Kelly, executive chairman of Ho Tram Project Company Limited.

In a similar move, Singapore’s Banyan Tree Holdings, one of the world’s leaders in hotels, resorts and luxury apartments in the Asia Pacific, following its first proposal on casino investment in the Laguna Lang Co resort complex in the central province of Thua Thien-Hue, reiterated the proposal at a mid-March meeting with Minister of Finance Dinh Tien Dung.

“Our US partner has shown considerable interest in running a casino business in the Laguna Lang Co. Once we get the license, we would work with our partner on the details of the plan,” an official at Banyan Tree Holdings Limited, told VIR.

According to statistics by the Ministry of Finance, as of end-2014, Vietnam licensed eight businesses to run casinos. The government has also recently allowed the development of two large-scale casino projects in Van Don in the northern province of Quang Ninh, and in Phu Quoc of the southern province of Kien Giang.

A recent study by the Institute of Regional Sustainable Development (IRSD) showed that if foreign direct investment in casino increases by $3 billion, Vietnam’s GDP will expand by 0.58 per cent.

Vietnam Investment Review - June 28, 2016

Casino town’s luck could run out

A final draft of a casino law has been submitted to the Vietnamese government which, if approved, could lift the ban on Vietnamese nationals gambling on their home turf – a move that some casino operators in the Cambodian border town of Bavet say could be a knockout blow to their struggling operations.

While the legislation’s details have not been publicly released, Lim Kim Seng, chairman of Lucky89 Group, which operates two casinos along the Vietnamese border, said its passage would deeply undermine Bavet’s allure to Vietnamese gamblers.

“We have been worried about this law for a long time and we hope that the Vietnam government won’t let its citizens gamble on home soil, as this would dramatically affect our business,” he said.

He claimed the border town has already seen slower growth as the number of Vietnamese cross-border excursions has declined in recent years.

“The vast majority of our players and revenue come from Vietnam, and if they continue to stop coming to Bavet the sector will face a lot of challenges to remain profitable,” he said. “It’s already not easy for Cambodian casinos here.”

According to Kim Seng, the Lucky89 casino currently operates less than 20 tables and relies primarily on revenue garnered through slot machines and interactive gambling products, some of which are offered online.

While Bavet is home to nearly a dozen brick-and-mortar casinos, Ros Phirun, deputy director of the financial industry department of the Ministry of Economy and Finance, said that any change in Vietnam’s laws would have little effect on the Kingdom’s burgeoning gaming industry.

“Yes, the law would likely make it difficult for Cambodian border casinos,” he said. “But as a whole it wouldn’t change the sector because gambling is a worldwide industry.”

He added that the casinos in Bavet are generally small operations that only attract a limited clientele. “Bavet does not cater to the VIP market and mostly attracts Vietnamese that come to play with maybe 10,000 Dong $0.45,” he said.

While the final draft of the casino law has been submitted to Vietnam’s government and the Ministry of Justice, it remains unclear as to how much flexibility the legislation will give Vietnamese players.

Oliver Massmann, general director of law firm Duane Morris Vietnam Llc, said Vietnam’s Finance Ministry has kept the text of the draft law under a tight wrap.

“Whether Vietnamese residents are permitted to enter casinos in Vietnam is a big question that may wait for a decision of the highest level of Vietnam’s political system,” he said.

Massmann said that while there was a concerted push to reform Vietnam’s gaming laws to be inclusive, the country’s Ministry of Public Security recently proposed a decree that lists casinos as a “conditional business”, which only prohibits Vietnamese from playing on gaming machines.

“This may give a hint that Vietnamese may enter casinos if they are ‘permitted’,” he said. “So, though not 100 per cent sure, it is likely that Vietnamese may enter casinos, but with specific conditions.”

Nevertheless, the casino decree could be issued as early as July 1. Vietnamese local media has reported that casino reform could bring in $800 million in state revenue annually.

Cambodia, on the other hand, collected $34.7 million in taxes from the Kingdom’s 63 licensed casinos last year.

While casino operators in Bavet are apprehensive about any slowdown in cross-border traffic, Jonny Ferrari, who runs the firm Global Gaming Network and helped implement Lucky89’s Start Live project, which built Cambodia’s first online gaming software, believes that the town can remain profitable.

“We can expect Vietnamese will play in Vietnam casinos once permitted. Still I project that Bavet will sustain its online operations,” he said, adding that many casinos have been expanding marketing operations in anticipation of the Vietnamese law’s passage.

“The online operations in Bavet are really geared toward Chinese and Vietnamese players,” he said. “If more casinos can adopt credible online platforms, Vietnamese players will choose Bavet because the casinos there provide reward cards where some winnings are provided as accommodation.”

He noted that while every Cambodian land-based casino has the right to operate a gaming website, Bavet casinos have yet to invest in the full market potential.

“The problem is that casinos either don’t know or are too lazy about online gaming,” he said. “They are taking it for granted by running sites that only cater to the Chinese underground, when they could be installing software that is easily marketable and can build regional brand awareness.”

By Kali Kotoski - The Phnom Penh Post - June 29, 2016