Border casinos may bear the brunt of Vietnam’s 3-year pilot scheme

Border casinos may bear the brunt of Vietnam’s 3-year pilot scheme

Vietnam is finally allowing residents to gamble in select casinos—a scheme aimed at opening up the lucrative industry, although analysts warn that casinos located in border cities may have to take the brunt of the government’s pilot program.

Border casinos may bear the brunt of Vietnam’s 3-year pilot scheme“We would expect many to struggle to survive over the duration of the three-year Vietnam locals pilot program,” Union Gaming analyst Grant Govertsen said in a note.

Last week, the Vietnamese government announced it would allow citizens over 21 years old to play in local casinos from mid-March, as long as they have a monthly income of at least VND10 million (USD445).

“After three years… the government will decide whether to continue Vietnamese people’s access to casinos,” the government said in a statement.

Under the three-year pilot program, local residents will be allowed to gamble at two select casinos—one in Quang Ninh province and the other on Phu Quoc island. Both casinos are yet to be built and are not readily accessible to residents of Hanoi and Ho Chi Minh City.

There is, however, a possibility that the town of Ho Tram can apply to be part of the pilot program since “the government retains an option to cancel (or even expand)” the scheme. Ho Tram is located more than two hours away from Ho Chi Minh City.

Naga insulated, but border casinos may be hit the hardest

Govertsen said Cambodian gaming company NagaCorp’s reliance on Vietnamese customers has “declined significantly,” which makes it “largely insulated” from the upcoming changes in Vietnam’s gambling scene. NagaCorp operates the NagaWorld casino resort in Phnom Penh, but Govertsen said the company has already grown its mass market story over the years.

“We estimate Naga’s current exposure to Vietnam, as measured by GGR, is less than 5% on mass market and slots and an even lower percentage of VIP,” he said.

The same, however, cannot be said for casinos located in cities like Bavet, which is the international border gate between Cambodia and Vietnam.

“While we do not expect a material impact to Naga as a result of locals gaming in Vietnam, we do expect the border casinos in cities like Bavet, Cambodia to bear the brunt of the downside as the border casinos are significantly easier to reach than Naga and have historically captured the lion’s share of Vietnamese customers,” Govertsen said.