Inside Asian Gaming

JUly 2015 inside asian gaming 25 Cover Story government opts for a single trial site, investment level would be an obvious criterion, rewarding the operator with the largest commitment. Ho Tram would win that race. However, unlike most casinos in Vietnam, ACDL has no local ownership, which could engender political opposition. Insiders suggest that rather than designating a single site, authorities might opt to offer local play to any casino that demonstrates a certain level of investment or fulfills other government requirements, initially limiting eligibility to a single site, but encouraging others to meet the criteria. Or Vietnam could adopt a different model altogether. “It could be like Korea, one place for local players that’s hard to get to,” Donaco International Executive Director Ben Reichel suggests. Donaco owns and operates Aristo International casino hotel on the border with China’s Yunnan Province. Some mooted IR sites would qualify as sufficiently remote, though it would take years to develop a gaming property and make it accessible. Mr Reichel also believes that any form of local play will benefit all operators, even if it attracts international big names as potential competition into the market. While moving slowly on the Casino Decree, the government decisively raised taxes. From 1st January, the gaming tax rate will rise to 35% from 30%. “High gaming taxes are never a good idea for casinos that are restricted to foreign players only,” The Grand’s Mr McCamley says. “It’s a very competitive market, high tax rates means it’s very difficult to be competitive when formulating incentive programs designed to attract foreign players.” Southeast Asian rivals Singapore, the Philippines and Cambodia have far lower base gaming tax rates. Vietnam’s increase will be accompanied by elimination of the 10% levy on winnings above $500, due from players but paid by casinos as a fraction of cash out, and reduction of the corporate income tax rate to 20% from 22%. However, Vietnam’s effective gaming tax rate isn’t as punishing as the nominal rate suggests. Unlike Macau, Vietnam allows casinos to deduct commission expenses from revenue before paying taxes, so the effective tax rate for most casinos is in the low- to mid-teens. The new rates will bump up tax bills two or three percentage points, depending on how much VIP business a casino does and its commission rates. Not crippling, but money off the bottom line nevertheless. For successful IR development, “Vietnam has got to get out of its own way,” Mr Klebanow says. “If the government got out of the way, it would be a super regional market, $4 billion with local players.” Until then, investors will find it hard to deliver the family of IRs Vietnam says it wants. Editor at large Muhammad Cohen also blogs for Forbes on gaming throughout Asia and wrote “Hong Kong On Air,” a novel set during the 1997 handover about TV news, love, betrayal, high finance and cheap lingerie. For successful IR development, “Vietnam has got to get out of its own way,” Mr Klebanow says. “If the government got out of the way, it would be a super regional market, $4 billion with local players.” Until then, investors will find it hard to deliver the family of IRs Vietnam says it wants.