Inside Asian Gaming

December 2015 inside asian gaming 13 Brisbane consortium led by Australia’s Echo Entertainment which was awarded the Queen’s Wharf IR development project in July, reportedly has taken a majority stake in the Vietnam project’s revival. Suncity is believed to have a small piece, in exchange for providing customers from its database. The proposed IR site is some two hours by road from the nearest international airport in Danang, which gets four flights a day from Macau. Danang’s Crowne International Club regularly receives Macau junket players and is located on the grounds of a four star beachfront hotel. Vietnam requires IRs to invest US$4 billion, acceptable in phases. Hoi An South’s US$500 million first phase, planned to open in 2017 or 2018, is expected to have a casino with 90 tables, a hotel and golf course. Vietnam permits gaming for foreign passport holders only. However, the government’s long awaited Casino Decree, expected imminently for nearly two years, may include some provision for limited local play. Looking at the three junket promoters’ initial moves into casino ownership, some common themes emerge. Most notably, junkets favor low tax jurisdictions. Saipan has no gaming tax. Clark offers a discount on the Philippine’s already low rates — 5% for VIP play and 17% for mass market. Vietnam has a nominal tax rate of 30%, rising to 35% on January 1 accompanied by a corporate tax cut from 22% to 20%. But it allows commissions to be deducted from revenue, so Vietnam’s effective tax rate under the new rules will be an estimated 17%. South Korea levies total 14% for foreigner-only casinos. “Lower taxes mean better rebates and commissions,” Tony Tong says, plus more profit into the operator’s pocket. As owners or promoters, junkets favor jurisdictions with liberal regulatory regimes. “Southeast Asian countries are more open minded about proxy betting, phone betting and online betting, which is unavailable in Macau,” Mr Tong says. With live video streaming from casinos and online gaming licenses available, he estimates off- site play constitutes 30% of VIP revenue in the Philippines. Pagcor has evolved as a regulator since 2004, when Jimei got its license, to the point where Caesars thinks it can have a Manila casino without risk to its US operations. Jimei has adapted to changing rules there as well as Macau. In Vietnam and Saipan, authorities are still creating regulatory regimes, though Saipan is subject to US federal law. Like other resort developers, junkets want attractive destinations. Quang Nam and Saipan have pristine beaches and are near historic areas including ancient temples in Vietnam and the atomic bomb launch site in Tinian. Fontana offers an escape from urban drudgery with greenery, golf and nearby mountains. Some things don’t seem to matter to junkets moving into casino ownership. While the Philippine market supports Fontana’s gaming and non-gaming segments, the newcomers don’t seem interested in local play. Korea and Vietnam are essentially foreigner only markets, while Saipan has just 50,000 people. Again excepting Fontana at Clark, easy commercial air access also doesn’t seem to be a major consideration. Junkets seem confident that they have the players and can get them to their destinations with the right incentives. Increasingly, they’re willing to put their money on it. “Vietnam requires IRs to invest US$4 billion, acceptable in phases. Hoi An South’s US$500 million first phase, planned to open in 2017 or 2018, is expected to have a casino with 90 tables, a hotel and golf course.” Cover Story