Apr 04, 2023 Newsdesk Latest News, Rest of Asia, Top of the deck
Vietnam has the potential to be a regional hub for VIP casino gambling, thanks to low operating costs and other favourable conditions, say several industry experts in comments to GGRAsia. They see Vietnam’s potential, even as the Asia-Pacific region’s previous high-roller hotspot, Macau, remains in a state of transition following recent regulatory changes.
Macau’s traditional facilitators of VIP play, junkets – with their historical role of providing credit mostly for Chinese mainland players and facilitating collection on losses – are facing increased compliance hurdles and scrutiny. In Vietnam, there is no specific licensing regime for operators of gambling-related tours, stated Lien Trinh, partner of law firm Bizconsult, based in the country’s capital Hanoi.
Vietnam’s facilitators of high-value overseas gaming patrons, known locally as “international tour operators” (ITOs), have adapted Macau’s “fixed room model” that used to be common amongst that city’s junket operators, remarked respectively Macau veteran junket boss U Io Hung, and industry consultant Ben Lee.
The Vietnam ITOs are a “hybridised combination of Southeast Asian casual model and the Macau fixed room”, suggested Mr Lee, managing partner of IGamiX Management & Consulting Ltd. Southeast Asian junkets typically “transfer money through money changers in their home country, and settle only when their players return home,” he stated.
Mr Lee further explained the traits of a Southeast Asian junket: “They travel all around Asia, moving from casino to casino as their players demand. The junkets do not have any fixed employees stationed in the VIP rooms or casinos… and rarely have their own transportation, relying primarily on the casino for all the basic support functions, although they may sometimes station managers in-country if their [business] volume justifies it.”
Elements of Macau model
To Mr U, the current VIP gaming scene in Vietnam is akin to “the old Macau junket model” that was in place prior to the city’s implementation of the new regulatory framework.
“In Vietnam, you can see the ‘fixed rooms’ practice run by junkets: it is almost like seeing the old Macau junket clubs. There are promoters there that earn rolling commission, or split gaming revenue [with host casino] – it is very ‘Macau’,” Mr U remarked to GGRAsia.
Under Macau’s prevailing gaming laws, junkets are now forbidden to share casino revenue in any form with their partnering casino concessionaires, and are also banned from contracting use of any part of a casino for operations in their own right.
“With the junket business in Macau effectively castrated, it’s understandable that the agents would all look elsewhere and Vietnam with its rise of integrated resorts could very well capitalise on that,” said Mr Lee.
Late March has seen what was termed a grand opening ceremony for a club linked to Let’s Win Group – an ITO in the Vietnam market – at Hoiana Resort & Golf, a beachside complex with foreigner-only casino in Vietnam’s Quang Nam province.
Let’s Win Group – which describes itself as a “Vietnam-based tourism and entertainment enterprise” – said in a recent press release that the ceremony of opening, and an accompanying celebratory dinner, were attended by “more than 500” industry representatives and guests from, respectively, Macau, Hong Kong, Malaysia, and Indonesia.
“You could see that in Vietnam, a difference [compared to Macau] is its ability to have varied sources of patrons from the likes of Malaysia and South Korea; they [the ITO] are still okay without having to rely hugely on mainland Chinese patrons,” said Mr U, who attended Let’s Win Group’s official-launch events.
Low operational costs, low tax
Vietnam has the potential to be a gambling destination that can increasingly draw VIP play from Southeast Asian nations and China, suggested industry consultant Mr Lee.
Vietnam’s “low operating costs, ready acceptance of foreign workers and management, and their low effective tax rate all make it an attractive destination,” said Mr Lee. He added that the effective tax rate in Vietnam on VIP gambling relative to every US$100 of gross gaming revenue (GGR) was circa 15 percent.
In Macau, the effective tax rate across the board – whether VIP or mass-market gambling – is 40 percent directly levied on GGR. That is 1 percentage point higher than the rate was before the new concessions that started on January 1, although Macau’s updated regulatory framework has made possible distinct gambling zones for foreigners within Macau casinos, with the potential that such play could be eligible for a lower tax rate on GGR.
The prevailing rolling chip commission rate in Vietnam, which stands at circa 1.5 percent currently, is also “more attractive” than Macau, remarked Mr U. The commission on rolling chip turnover in Macau is capped at 1.25 percent.
Vietnam does not have any specified licensing terms or profit models for operators of gambling-related tours, lawyer Ms Lien told GGRAsia. Vietnam’s applicable licensing terms for tour operators – be it ones running either travel-only services, or golf tours, or ones for gambling – are all bracketed together, under the country’s Law on Tourism and its respective decrees, she explained.
Vietnam does however have restrictions on the practice of lending money to foreigners, Ms Lien noted. “Lending to foreigners is practically restricted by the [Vietnam] government. The Ordinance on Foreign Exchange Management only prescribes the outward lending by the government and outward lending by the credit institutions and organisations. Lending by individuals is not allowed under this Ordinance,” the Bizconsult partner noted.
She added: “For outward lending by organisations, it should be registered with the State Bank of Vietnam. However, in practice, it is very hard for an enterprise to provide [a] loan to foreigners in Vietnam.”
If there is any money lending between a junket and a foreign gambler, such transaction would not be recognised by Vietnam’s courts, explained Ms Lien. “Should there be disputes by the parties, the court could announce this transaction invalid as it is not allowed under the laws,” she added.
While Vietnam has several potential advantages in appealing to regional VIP play, its “bureaucracy in relation to approvals, certifications and forex [foreign exchange] controls can be quite problematic,” remarked IGamiX’s Mr Lee.
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