Gambling laws have been relaxed and the race is on to corner the billion-dollar market.
Macau’s biggest junket operator Suncity Group plans to pour billions of dollars into building a resort in Vietnam’s popular resort town of Hoi An, Bloomberg reported.
The group has teamed up with Vietnam-based closed end fund VinaCapital and Hong Kong-based conglomerate Chow Tai Fook to build the $4 billion integrated resort and casino in the coastal town, which is scheduled to open in 2019.
Suncity owns 34 percent of the coastal project through its Hong Kong-listed subsidiary and has a management contract to operate the casino.
The group is one of a number of companies that have been eying Vietnam’s gaming business expansion, especially now the country has loosened regulations on gambling.
Singaporean resort developer Banyan Tree Holdings has also asked the government to license a casino at the Laguna Lang Co resort development.
The resort, located about an hour by road north of Da Nang International Airport, has more than 300 hotel rooms and villas plus a golf course, spas, residences and a conference center. The second phase of development at the complex will include more hotel rooms, residences and a casino, if permission is granted.
Vietnam’s decision to allow locals to roll the dice in casinos for the first time is one of the reasons for the surge in gaming investment. Before the law was changed only foreigners were allowed in casinos.
Earlier this year, the Vietnamese government announced that from mid-March and for a three-year trial period, citizens aged over 21 with a monthly income of at least VND10 million ($445) will be allowed to gamble in local casinos. Similar to rules governing gambling in Singapore, Vietnamese people are charged VND1 million per day or VND25 million per month as an entry fee.
The country’s average annual income was around $2,200 last year.
Vietnamese people are big fans of gambling, so the new regulation was expected to help casinos attract more customers.
A study by Augustine Ha Ton Vinh, an academic who has researched Vietnam’s gaming industry extensively, showed Vietnamese spend an estimated $800 million each year gambling abroad in places such as Macau, Singapore and just across the border in Cambodia.
Hoping to tap tourists and possibly domestic gamblers, local property conglomerate FLC Group has plans to build a casino resort in the Van Don Special Economic Zone in northern Vietnam. Quang Ninh Province’s People’s Committee has recently given the firm the go-ahead to build the 4,000-ha complex, including a casino, five-star hotel, convention center and golf course on the islands of Ngoc Vung and Van Canh at a cost of $2 billion.
Gaming companies are interested in the casino business in Vietnam because the industry is still new and there’s little competition, said Nguyen Ngoc Thanh, vice chairman of the Vietnam Property Association.
Those that arrive here first could easily dominate the market and maximize their profits, he added.
In addition, the Vietnamese government has recently reduced obstacles for would-be casino developers. Hanoi used to require a minimum investment threshold of $4 billion, but that figure has been revised down to $2 billion as part of a recent decree.
With about 30 gaming facilities, Vietnam could generate as much as $1.2 billion in gross gaming revenue each year, according to a Grant Govertsen, an analyst with Macau-based Union Gaming Securities Asia.
Vietnam’s eight recently-licensed casinos, mostly small, generate an estimated $300 million in gaming revenue, according to Forbes magazine.
Not a surefire bet
Despite investors’ eagerness to open casinos in Vietnam, it has not been that easy to attract gamblers, and many casinos have been performing below expectations.
The Grand Ho Tram Strip is an example.
In 2016, the Ba Ria-Vung Tau-based resort, which opened in July 2013 with 541 hotel rooms and a casino with 90 tables and about 500 gaming machines, was losing up to $3 million a month, Nikkei Asian Review quoted Ben Lee, who acted as a consultant for Ho Tram in its early stages, as saying.
Former head of the Foreign Investment Agency under the Ministry of Planning and Investment Phan Huu Thang said casino complexes have failed to attract gamblers because of poor services.
Most casino complexes in Vietnam are small-scale and only offer gaming. They do not provide entertainment or shopping services, he said.
Meanwhile, some casino managers have blamed their losses for a lack of Chinese gamblers, the main clientele for most casinos in Vietnam, citing the case of the Royal International Corporation.
The firm, which runs the only casino in Vietnam’s famous Ha Long Bay, said in a new financial report that its losses in the third quarter had jumped 23 times from a year ago to more than VND69 billion ($3.04 million).
That added to a VND100 billion ($4.4 million) loss in the first nine months, a fourfold increase from 2016, the company said.
Most of the losses were incurred by its casino operation, but its villa business also played a small part, it said.
Some experts have warned that Vietnam needs to carefully consider licensing more new casinos as they could saturate the market.
Source: Ngan Anh