To roll or not to roll, that is the
multi-billion dollar question Vietnam's ruling Communist Party now weighs. The
casino quandary hinges on how a nominally communist state that still deploys
revolutionary rhetoric can openly embrace such a free-wheeling capitalist
concept.
Vietnam's
rulers have long grappled with the casino concept. Party hardliners have said
legalizing gambling will open a Pandora's box of social evils, something the
communist revolution vowed to eradicate. More moderate officials have pointed
to the potential financial boon of more tourism and tax revenues.
A
breakthrough in the ideological struggle came in 2008 when Prime Minister
Nguyen Tan Dung almost halfway into his first term of office approved a Las
Vegas-style casino integrated resort. The US$4.2 billion Ho Tram Strip, under a
Metro-Goldwyn-Mayer banner, is now under construction and situated about 80
miles (128.7 kilometers) from Ho Chi Minh City.
Since,
five other casino-style resorts have been licensed across the country.
Interestingly, four are located in the country's more conservative northern
region. Two of these are situated within a stone's throw of the Vietnam-China
border gate, strategically positioned to profit from gambling-mad Chinese. The
Genting Group from Malaysia is a partner in the Lao Cai facility and a Hong
Kong company is a partner at the facility at Mong Cai.
The
latest entry is an American-backed resort in the middle of the country at
Danang, which operates under the same management contract of the northern Mong
Cai facility. Twice a week, Chinese punters are flown in by charter flights
from Kunming, Guangxi and Hong Kong. Ironically, they land on the same runway
where B-52 bombers were launched to bomb Hanoi during the American War.
In the
official lexicon, casinos do not exist in Vietnam. However, "entertainment
centers" with "bonus games" for foreigners are allowed to exist
with proper licenses. This generally means a room dedicated to a limited number
of table games, including Roulette, Baccarat, Blackjack, Tai Sai and also slot
machines. Besides these purpose-built facilities, some hotels are licensed to have
a room containing slots and electronic games.
The
first of these casino-style entertainment centers was established by Macau's
gambling czar Stanley Ho, situated about two hours from Hanoi at Do Son on the
outskirts of Haiphong City. Presumably, the "experiment" was located
close enough for top Party officials to visit for monitoring purposes.
All
gambling operations in Vietnam are formed under a joint venture arrangement.
The Royal International facility owned and operated by a group of Taiwanese investors
at Halong Bay developed the model by "equalizing" (ie public listing
on the Vietnam Stock Exchange) its operation in July 2007.
Like
China, Vietnam does not allow its citizens to gamble within the country.
Would-be punters are forced into accepting a casino junket, where gamblers are
flown to an area where legalized gambling is available. They are booked into a
hotel-casino at the junket company's expense in exchange for a cut of the
gamblers' turnover from the casino.
Game changer
Rumors
run rife that a draft decree on gambling will soon be put before the prime
minister. Foreign investors weighing possible casino opportunities in Vietnam
have expressed their hopes that locals will be allowed to gamble. Party and
government watchers, however, believe such a move is at least 10 years away.
Macau's
and Singapore's success at extracting big revenues from a small number of
tourist arrivals through the effective targeting of high rollers will give
encouragement to Vietnamese officials to maintain its ban on locals gambling.
At the same time, it is generally accepted that casinos would boost
significantly tourism and tax revenues at a time of fiscal concern.
"You
just have to look at Singapore and Macau as prime examples. Singapore has
increased tourism by 20%. Macau is now five times bigger than Las Vegas [in
gaming revenue]. In other countries like Cambodia and Vietnam, everybody's
looking at gaming to drive tourism and if you don't have it, you lose out in
the race," said Ben Lee, managing partner of IGamiX Management &
Consulting Ltd.
Still,
foreign interest in Vietnam's gaming potential is growing. Casino tycoon
Sheldon Adelson of Las Vegas Sands recently visited the country and offered to
build two integrated resort (IR) complexes with a total investment of US$6
billion. His key requirement for the complexes, which would comprise hotels,
restaurants, exhibition centers, shipping malls, spas, theaters and museums,
was that they would be located in Hanoi and Ho Chi Minh City.
The IRs
propose to follow in the footsteps of similar developments in Malaysia and
Singapore. The first recognized IR sprung up in the early 1980's when Genting
developed a casino in Malaysia with a variety of leisure and entertainment
facilities. Singapore's Resorts World Sentosa and Marina Bay Sand commenced
operations in 2010 and already earn more than the Las Vegas Strip.
Minister
of Planning and Investment Bui Quang Vinh recently said that some foreign
investors are seeking a new policy that will allow locals to enter casinos but
that it is not up for discussion. "Casinos can help attract more foreign
tourists and boost economic growth, but they have to be managed well to make
sure locals do not participate in gambling," he recently said.
Other
gaming areas are apparently open to negotiation. There are indications that the
government will soon legalize sports gambling to limit the social damage caused
by underground gambling syndicates.
Finance
Minister Vuong Dinh Hue recently visited Singapore to study how sports betting
works there. On his return, he said Vietnam could learn from Singapore's
example in setting up a legal and organizational framework for large-scale
betting operations.
Some
have interpreted his comments as a top leadership signal towards a more
tolerant approach to gaming. Under current laws, only prime minister Dung has
the authority to approve new casino licenses. Recently confirmed to another
five-year term of office and with the country facing renewed economic strains,
it's a gamble many foreign investors think he should take.
Karl D
John
Asia
Times
Business & Investment Opportunities
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