Overseas casinos to eye Vietnam more closely than ever

[HANOI] Vietnam's revolutionary founder Ho Chi Minh relied on lottery ticket sales to raise money for schools and hospitals during the war years. Now Hanoi's Communist leaders are looking to casinos, horse betting and modern lottery-ticket machines to do the same.

So far this year, Prime Minister Nguyen Xuan Phuc has issued two decrees aimed at upping Vietnam's game in the regional competition for gambling revenue while reducing the country's growing budget deficit. A pilot plan to take effect in March will allow Vietnamese to gamble in the country's casinos for the first time-currently only foreigners can. Another will allow bets nationwide on horse and dog races, as well as international soccer matches. This follows what officials call an "American-style" lottery started last year by the finance ministry in partnership with Malaysia's Berjaya Corp.

"They need tax revenues," said Alexandre Legendre, a Hanoi-based partner at Leadco Legal Counsel, which has advised foreign investors on the country's gambling opportunities. "The fiscal situation of the country is under pressure." Vietnamese going abroad to such gambling locales as Macau, Singapore-and just across the border in Cambodia-spend an estimated US$800 million on gambling every year, according to Augustine Ha Ton Vinh, an adviser to the Van Don Special Economic Zone where a casino funded by local investor Sun Group is planned about 175km northeast of Hanoi. Now the government will aim to keep that money at home.

New legal outlets for gambling would be greeted enthusiastically by Vietnamese, who spent about US$13 billion on lottery tickets from 2011 through 2015, with revenue growing an average of 12 per cent annually, according to the finance ministry. The Southern Lottery Council, which comprises lottery companies in 21 provinces, pulled in almost US$3 billion last year-up more than 200 per cent from 2007, according to the organization. Gaming industry investments will also boost the economy. An additional foreign investment of US$3 billion into Vietnam's casino businesses could increase gross domestic product by 0.58 per cent in the first year, according the Institute for Regional Sustainable Development in Hanoi.

The new computerized Berjaya joint venture, Vietlott, supplements and even competes with Vietnam's provincially operated lotteries. The local, five-decades-old operations provide a form of social welfare for elderly, poor and disabled ticket sellers who wander in and out of street cafes selling paper tickets. Vietlott reported revenue of more than US$70 million last year after rolling out operations in about 20 per cent of the country's provinces starting last July.

Nguyen Van Thanh, who at age 55 left his comfortable administrative job at a state-owned insurance company, stands all day selling Vietlott tickets for 10,000 dong, or about 45 cents, in the garage of a Soviet-style apartment complex across the street from the State Bank of Vietnam in Hanoi. He sells as much as US$1,300 in lottery tickets a day.

"Vietnamese people like to gamble," he said. "We like being lucky." For years, the government has been ambivalent about gambling. Allowing Vietnamese to enter casinos built for foreigners is an experiment that will last for three years while the program is assessed. Ho Chi Minh personally approved of the first lottery in late 1961 to raise money for the construction of schools and hospitals in Hanoi, according to Duong Trung Quoc, a parliamentarian and secretary general of the Vietnam Association of Historical Sciences.

While lottery revenue has funded education and social welfare for decades, the government nonetheless fears unrest from what officials call "social evils" associated with gambling, such as prostitution, drunkenness, and heavy indebtedness.

Until the latest decrees, Vietnamese have only been allowed to legally play state-run lotteries and place bets at a highly regulated dog-racing operation in the southern province of Ba Ria-Vung Tau.

The first casinos open to locals most likely will be far from urban areas, said Ben Lee, managing partner at Asian gaming consultancy IGamiX. An earlier decree written by politburo members-and later revised by the prime minister to exclude specific projects-awarded the first licenses to Vingroup JSC to build on the southern island of Phu Quoc and Sun Group's Van Don in the north. After the new decree, the politburo will still decide which of the country's eight casinos and proposed new projects get licenses.

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