Vietnam was once viewed as fertile ground for casinos and gaming business to invest. Nowadays, it’s a place they avoid because it’s such a gamble. The government recently changed their mind about lifting a ban on local citizens being able to play at casinos and that significant development is forcing foreign investors to take their money elsewhere.
In 2013, the Vietnamese government made a decision to overturn a ban at casinos for locals, specifically at a casino that was being built in Quang Ninh Province (on the Chinese border). There was a lot of excitement based on that decision. However, it proved to be short-lived as all of that changed last month. As the new government was put in place, they repealed that previous decision. The Ministry of Finance said that foreigners and Vietnamese citizens that hold foreign passports are the only ones allowed to gamble in casinos while the rest of locals will not be permitted.
This government, which is headed by Prime Minister Nguyen Xuan Phuc, claims that they’re concerned about money laundering and a spike in gambling addictions. However, the volatility of the decisions – going from no, to yes and back to no – is sending a ripple effect through the business side of things. Foreign investors, who were previously looking to break into the market, have been scared off as they don’t want to get involved in a situation that looks very fluid. Vietnam was thought to be a hotspot for those looking to invest in the gambling industry. It is viewed as an area of interest as nearby Macau suffers through a decline. The Chinese government has tightened up regulations in Macau, so many investors figured the play would be in Vietnam, until their government did the same.
Vietnam would seem to be ripe for the gambling industry to break into as almost 60% of its population is younger than 35. Over the last ten years, there has been a jump of 60% in those that have graduated from university. That would seem to imply a younger generation with better jobs, which means more disposable income. That’s put it on the radar for all sorts of major gaming businesses. Las Vegas Sands has been one of those companies trying to break into Vietnam, but they’re worried about the ban keeping locals out since that would take a chunk of their business away.
The regulations don’t seem to end there as the government has also imposed a number of taxes on any casinos being built in Vietnam, starting with a 35% revenue tax on their gross gaming revenue, along with a 20% tax for corporate income and a 10% added value. It should be said that this latest draft to appeal to the government hasn’t been finalized yet, but experts are expecting it to pass.
This is a notable shakeup in the regulations as some experts had speculated some forms of change were coming, but not another ban on locals along with tax hikes. Many thought that the government would even look into instituting an entry fee for locals, which would be done to keep low-income players away from the tables, but they decided to take a more extreme measure and really drive business away.
Vietnam is losing out on a lot of money because they are losing out on tax dollars. It’s not going to stop gambling as the result will see their citizens heading out of the country to get their gambling fix, to places like Macau. The government says that they’re continuing to study the effects of gambling and might change their mind in the future. For now, they are merely hurting their own bottom line.