Vietnam’s casinos report slow business before lifting of gambling ban for locals
The numbers cast doubt on whether the industry, set to soon benefit from eased restrictions, has been as lucrative as many have thought.
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Since 1992, Vietnam has opened seven casinos in some of the most popular tourist destinations – Quang Ninh, for instance, is home to the famous Ha Long Bay. The casinos however are strictly reserved for foreigners only due to a long-running ban on gambling.
Various reports have suggested that it's a lucrative industry. But now casino owners across Vietnam claim that they are either losing money or making very little because foreigners, especially those from China and Taiwan, are becoming less inclined to gambling in Vietnam.
The casino in the northern port city of Hai Phong posted losses of up to VND169 billion a year between 2008 and 2012, according to a report from the local government.
Meanwhile Australia's Donaco International Limited, which operates leisure and entertainment businesses across the Asia Pacific region, highlighted in its annual report that last year’s net profit from its casino and hotel complex in the northern province of Lao Cai was one-tenth of its counterpart facilities in Cambodia.
The owners have also blamed their lagging business in recent years on a rapidly growing competition in which more casinos are fighting for fewer players from overseas.
According to Bui Quang Vinh, the Minister of Planning and Investment, many local governments have planned to bet big on gambling. Even one of Vietnam’s poorest provinces Ha Giang, with a majority working in agriculture, has asked for permission to build a casino.
The government last month said it would allow citizens over 21 years old with a monthly income of at least 10 million dong (US$445) to hedge bets in local casinos from mid-March under a three-year pilot program.
Vietnam's average annual income was around US$2,200 last year.
Since Vietnamese gamblers have no access to local casinos, they often go across the border to Cambodia where there are many centers mostly targeting Vietnamese players.
Vietnam’s decision to lift the ban, after long consideration, has sparked hopes that the local casino industry will soon witness a boom.
“Vietnam was viewed as a potential great investment opportunity should the government allow locals,” said Grant Govertsen, founding partner of Macau-based research firm Union Gaming Group, in a note to CNBC.
The Southeast Asian country is seen as a bright spot on the global gaming market as nearly 60% of its population is under 35, according to market research firm Nielsen, expecting the middle class to more than double in size between 2014 and 2020, from 12 million to 33 million.