Inside Asian Gaming

inside asian gaming May 2014 32 something that has been off limits to them by law since the industry was granted official recognition in the early ’90s. The ban has been a major obstacle to Vietnam’s ability to attract the large-scale foreign investment in tourism the government says it wants. Proposals have centered on softening the ban on some sort of trial basis at Van Don, which would be the easier sell politically, and the Politburo is believed to concur, at least in principle. Domestic Affairs Silver Heritage, a regional casino investor and machine gaming operator based in Hong Kong, estimates Vietnam’s six foreigners- only casinos to be worth US$275 million-$300 million in gaming revenue a year. That’s only about 0.1% of the Asian market as calculated by Fitch Ratings. It is perhaps the market’s supreme irony. Phnom Penh’s NagaWorld figures 40% of its annual gaming revenue is contributed by Vietnamese streaming into Cambodia by the tens of thousands for the flutter prohibited them at home. So as ironies go you could put a price on this one—a hefty $100 million a year at least, not counting a string of gambling dens along the border where untold millions are lost—while The Grand – Ho Tram struggles mightily on a beautiful beach lapped by sky blue waters 90 kilometers from Ho Chi Minh City, the largest metropolitan area in the country. Ho Tram’s 90 table games and 1,000 slot machines took in less than $1 million a month combined from its opening last July through the beginning of this year. In all it generated $12.5 million, which includes the 540-room hotel, the restaurants and the rest of the non-gaming offering, which is sizable. This was revealed in testimony its US-Canadian ownership recently gave to the National Assembly’s Finance and State Budget Committee. In light of it there are some key provisions in the framework for national regulation the Assembly is considering that look almost comical. The draft prepared by the Ministry of Finance requires developers to commit to no less than US$4 billion to be considered for a casino, $2 billion of it up front. That’s a lot of money given that the new rules contemplate no statutory limit on the number of licenses. Investors also will need to show at least 10 years of casino management experience, which in theory invalidates both The Grand and the Lims up at Lao Cai. No operator in the current market would qualify. The one plus is that existing caps on slots and tables (2,000 and 180, respectively) would be removed, and an earlier proposal for limiting gaming to 3% of total floor space has been scrapped. At any rate, Lim Kok Thay and Genting walked away for far less. They’d planned a massive resort for a special economic zone in the province of Quang Nam near the popular resort city of Da Nang on the central coast. Da Nang has been good to its small casino at the Silver Shores International Resort. The city’s airport, the country’s third-largest, is only an hour and a half from southern China. Officials say foreign visitation rose by more than 17% last year, and Hanoi has agreed to a recommendation from the local goverment for a larger casino at Silver Shores. Whether this would have been enough to support what Genting had in mind is an open question, and probably one without a desirable answer, if Ho Tram is any indication. Certainly, Genting thought better of it, and in 2012 they abandoned their venture, known as South Hoi An, which, not surprisingly, has languished ever since, together with its $4 billion budget. The surviving partner, VinaCapital, a Vietnam-facing fund manager and property developer, has hung on, though, and recently announced that it has secured backing to begin moving forward on it in phases with initial plans calling for a 500-room luxury hotel and 90 table games. The new investor is a Los Angeles-based group known as Peninsula Pacific whose chairman had founded a regional casino operator in the US that was sold to Las Vegas-based Boyd Gaming a couple of years ago for $1.4 billion. Another US group, Rose Rock, it’s called, has unveiled plans for a $2.5 billion resort on the south-central coast with a 700-room luxury hotel, high-end residences and 350 marina berths. The Rockefeller Marina City is reported to have the endorsement of the Communist Party’s all- powerful Politburo, and the buzz surrounding it was enough last year to move some members of the National Assembly to raise the possibility of allowing the country’s population of 90 million to gamble in casinos, something that has been off limits to them by law since the industry was granted official recognition in the early ’90s. In Focus