Vietnam takes steps to open sports betting, but challenges remain

Vietnam has embarked on major reforms toward opening the country to sports betting, with major Asian-based foreign investors joining the queue to capture part of a potentially lucrative market.

The moves, launched in the past two years by way of an initial decree, and set out in a parliamentary bill this year, hope to capture a portion of the multi-million-dollar underground sports betting market and lure back overseas spending estimated at around US$800 million a year.

Analysts welcome the moves, but say there is still some way to go for investors, including a lack of infrastructure and high charter capital requirements that are likely to mean that interest will be focused only on major cities.

Maxfield Brown, manager business intelligence with Ho Chi Minh-based consultancy, Dezan, Shira and Associates, says the moves mark an “important step towards opening the industry up to foreign investment and increasing state revenues.”

“Legislation surrounding gambling in Vietnam is still in the early stages of the legislative process,” Brown told AGB in an email. “Vietnam has provided clarification to date on horse racing, greyhound racing, international football, and physical casinos,” he said.

So far, urban centres, such as Ho Chi Minh City, Hanoi, Da Nang and the surrounding provinces are targets for investment. “Investors in these locations benefit from higher levels of income among residents and also attract higher net worth tourists,” he said.

“Investors will benefit from rising wages and steady increases in gambling spending that is estimated to be growing by around 12 percent annually.

“The underground gambling market in big cities and tourist destinations will take a big hit as large investors displace smaller-scale underground operations,” he said.

The sports betting bill is set to come into effect from the start of 2019, although some football game bets were cleared from April 2018 to coincide with the FIFA World Cup.

The bill, passed by Vietnam’s National Assembly in June this year, followed that of a 2017 decree, which introduced a five-year pilot program setting out “strict conditions for firms involved in betting activities.”

According to Dezan Shira these include charter capital of $44.2 million for horse racing and football and $13.2 million for greyhound racing.

But the consultants noted there remains a lack of clarity in several areas, including categories of sports being included, and how the government will implement the bill’s guidelines.

The imposition of high capital requirements was seen as a deterrent to invest elsewhere in the country. “Rural locations with established underground gambling organizations and relatively low investment are not expected to see significant [activity],’ Brown said.

For football, the government will allow betting only on international games recognized by FIFA, the global governing body, which includes the World Cup, the Confederations Cup, Capa America, the Champions League and the Europa League.

This means, popular football competitions from the English Premier League, Spain’s La Liga, and Italy’s Serie A are excluded.

Dezan Shira and Associates say this has created a dilemma. Vietnamese citizens are not allowed to legally bet on these league matches, while betting operators are reluctant to get involved for events held only once a year, or every four years.

Other guidelines include the fact that all players must be at least 21 years of age, while the maximum bet amount is set at one million VND ($44) per day with a minimum of VND 1,000 (4.42 cents)

Foreign investors leading the charge to invest in the new betting climate include companies from Hong Kong, Singapore, South Korea and Malaysia.

In early April, SGX Catalist-listed Amplefield Ltd. signed a memorandum of understanding with horse breeders Equine Sanctuary (Sdn Bhd) (Malaysia) to enter a joint venture to provide design and consultancy services and to oversee construction of a racecourse and racetrack in Ho Chi Minh City.

The proposed development coverers 300 hectare of land in Le Minh Xuan Ward in Ho Chi Minh City for the racecourse and race track and form part of the Sing Viet City development.

The development includes 16,000 residential units, along with a resort covering horse racing, gaming and golf facilities.

Amplefield executive director, Yap Weng Yau, in media comments, called the MOU “a first step towards the development of “racino’ facilities,” with “tremendous potential” that would be a huge draw for both tourists and locals and stimulate further development.

Other investors include gambling operator Golden Horse from South Korea, with announced plans to set up a subsidiary company in Vietnam backed by an investment of $500 million, with proposals set to be submitted to the Vietnamese Authorities by October.

Choi Hak Soo, president of Golden Horse met in July with local leaders of Bac Ninh province and said that the investment plans for the 400-hectare entertainment complex included a horse racing course, a resort, and residential area, with the creation of up to 10,000 jobs.

But there remain calls for the government “to do more” to spark further interest from operators and investors.

“The Government has already taken the necessary steps to legalize betting, but it needs to provide further clarity in the bidding process and increased options for betting operators,” the consultants added.