Vietnamese punters at the Grand Casino in Hanoi. Photo: Facebook
Vietnamese punters at the Grand Casino in Hanoi. Photo: Facebook

In journalist Norman Lewis’ A Dragon Apparent, a late 1940’s travelogue across Indochina, the writer notes Vietnamese merchants kept bowls of dice at their stalls with which they engaged in gambles with their customers.

Housewives would routinely bet on the days their horoscope was fortunate, Lewis noted, “which means that on slightly more than fifty percent of such occasions they return home empty-handed and with the housekeeping money gone.”

“Gambling is the besetting sin of the Vietnamese,” the journalist wrote at the time. “It is a national mania.”

Since the ruling Communist Party took control of the country in 1975, that mania has been strictly illegal for Vietnamese nationals, part of the regime’s bid to uproot perceived societal ills.

According to the Penal Code, any Vietnamese who places an illegal bet worth more than US$88 can be given a custodial sentence. A bet worth more than US$2,200 can lead to a prison sentence of between two and seven years.

But that will soon change as the Party toys with allowing local gambling in order to raise state revenues. Last year the government passed a motion to allow Vietnamese nationals to gamble in select casinos.

A guard stands at the entrance of Club 99, a small casino run by Furama Resort in the Vietnamese central coastal city of Da Nang. Photo: AFP/Hoang Dinh Nam

Under the three-year trial program, local gamblers must have a monthly income of at least US$445, have no criminal history and have the permission of their family. Daily passes will cost the local dong equivalent of US$44 to enter casinos designated under the program.

Over the last few years, the government has passed numerous gradual reforms to its restrictive gambling laws. In September 2016, the government passed a major resolution to allow foreign investors to build integrated casinos in the country.

Last year, a five-year pilot program was launched that allowed for betting on horse-racing, greyhound racing and international football, all with heavy state regulation.

In June this year, the government announced that the still-under-development Bai Dai Integrated Resort Project on the southern Phu Quoc island will be the first of two approved casinos where Vietnamese nationals can legally gamble.

That loosening has been carefully considered. In 2013, the state commissioned a confidential study to measure the negative impacts of illegal gambling on Vietnamese society, says Augustine Ha Ton Vinh, an expert in the gaming business who has advised the government on the reforms.

A Vietnamese dong note on a billiards table in Vietnam. Photo: iStock/Getty Images

There is no reliable estimate on the size of Vietnam’s black market gambling sector, but it is likely to be worth billions of dollars, analysts who requested anonymity say. As the government bids to bring some of that gaming above ground, it has cracked down hard on underground venues.

In March, a major bust on a nationwide illegal gambling ring that was reportedly worth US$420 million implicated two senior government officials. Ninety other people, including junior officials, were also nabbed in the sting operation.

In September, the ringleader of another illegal online sports betting ring was sentenced to nine years in jail, while another 25 people were also imprisoned for their role in an operation that was reportedly worth US$26 million. A separate online gambling ring busted late last year was thought to be worth US$89 million.

It’s not clear how much of that illegal gambling the state hopes to bring above ground. What is clear is that the government needs new tax revenue sources as it comes close to breaching its self-imposed public debt ceiling of 65% of gross domestic product (GDP).

The government currently imposes a 35% tax rate on all gambling operations. Recently, however, it has forwarded motions to the National Assembly that could cut that rate to between 15%-20% for integrated resorts in special economic zones.

“With a US$2-$3 billion industry, the government is looking at a reasonable increase in the tax revenue in the first three years of the integrated resorts and other gambling venues,” says Vinh.

Vietnam’s government is desperate for new revenue sources.

Those tax revenues aren’t just lost to local black market gambling. Vinh says a few years ago that Vietnamese spent around US$800 million each year gambling abroad, including in neighboring Cambodia and Macau.

But there is potentially an even more lucrative untapped sector. Legal restrictions and a small customer pool meant that the casino industry was underinvested for decades, which deterred tourists, namely mainland Chinese, who want to combine their holidays with a punt.

By comparison, neighboring Cambodia has quickly become a hub for gambling tourists. NagaWorld, which holds a monopoly on gambling rights in Phnom Penh, reportedly recorded US$625 million in revenues last year, thanks mostly to visitors from China.

Airlines and hotels now cater exclusively to Chinese tourists in Cambodia, so much so that Chinese visitors to the country increased by 40% last year to 1.2 million tourists, according to the ministry of tourism.

Sihanoukville, a gambling town on Cambodia’s southern coast, is now widely seen as a Chinese enclave and even an emerging new Macau. Gaming experts say that Vietnam could one day compete with Cambodia with more investment and industry know-how.

There has been substantial investment in recent years, with speculators gambling on domestic reforms opening up the sector even further. This month, the Ministry of Finance said it would cut even more red tape on investing in the gambling sector.

Vietnam aims to attract more foreign gaming investment. Photo: Wikimedia Commons

The Grand Ho Tram Strip, the first and biggest licensed integrated casino and resort in Vietnam, cost an estimated US$4.2 billion to develop by its American owners.

The US$4 billion Hoiana project, funded by a Hong Kong conglomerate, Macau’s SunCity and a Vietnamese investment firm, is expected to open next year. Meanwhile, several other casino resorts worth billions of dollar are expected to open in the coming years.

All this investment seems to be attracting the right sort of attention. World Poker Tour, a prestigious tournament, held its first event in Vietnam this month.

But it’s not just the money that interests Hanoi. Sources in Ho Chi Minh City say the social problems associated with illegal gambling, including violence, indebtedness and crime, are believed to be becoming more prevalent.

Xinhua, China’s state media outlet, reported that during the Football World Cup this summer the number of pawnshops in Vietnam “mushroomed” and some shops “have been established and operated just during the football tournaments to serve local gamblers.”

Minister of Public Security To Lam reportedly instructed police departments to increase their inspection of pawnshops during the competition after it was alleged that many were offering daily interest rates higher than the law allows.

Vietnamese authorities bust an illegal gambling den in a file photo. Photo: Facebook

The police also reportedly increased investigations into alleged loan sharks. At least a dozen illegal football betting rings were busted during or after the international competition, some of which had built betting books worth millions of dollars.

The social impact of black market gambling is immeasurable, though local media often report on the barbaric tactics employed by loan sharks and gambling syndicates to collect payments from punters.

Yet gambling reforms are creating a highly unequal situation. Current laws, which aren’t likely to be reformed anytime soon, mean that the only Vietnamese nationals who can gamble legally are those who earn more than US$445 a month – about three times the average monthly salary in Hanoi and far more than rural dwellers earn.

But even though the government has taken down many black market gambling rings in recent months, the underground sector will remain lucrative and popular so long as it’s the only game in town for the vast majority of the population.

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