Vietnam currently can’t support multi-billion investment

The optimal size for investment in a Vietnam casino is about $250 million under current market conditions, about one sixteenth of the size of the minimum investment originally stipulated by the government for an integrated resort project, according to an industry consultant.

Vietnam’s government is currently considering draft legislation for the country’s casino industry. The latest draft of the long-awaited bill cut that original stipulation for a $4 billion investment down to $2 billion and is also expected to allow locals to gamble in select locations. However, the bill has still not been ratified.

“Our argument is that for the current market conditions no more than $250 million is the investment that people are willing to take the risk to invest,” said Sam Sheng managing director of Double Square Consulting (Macau). “Unless you have all the rules and regulations in place with local gaming, the metro area etc, then you can ask for $4 billion.”

Speaking at G2E Asia Sheng said he is currently working with investors and looking at several potential casino sites in Vietnam. Generally the investors are private investors, or private equity from across Asia, he said.

“Currently everyone is focusing on moving the VIP operations out of Macau to the Philippines and elsewhere, but I don’t think that’s sustainable,” he said. “We are looking at two segments, that we think are both profitable and sustainable. We are looking at the younger generation of the Chinese middle class and the second is the local Vietnamese.”

As a result, the resort will need to have a strong non-gaming element, with 65 percent of revenue from non-gaming sources.