Local game – IAG
AGI recently spoke with Shaun McCamley, former president of The Grand Ho Tram Strip integrated resort on Vietnam’s southeast coast, about the challenges faced by the country’s foreign-only casinos and plans to add two more casinos to a pilot program for local games.
Inside Asian Gaming: It was recently reported that Vietnam’s Ministry of Finance wants to extend its pilot program for locals by two years and add two more casinos to the mix – one in Da Nang city and one on Hon Island Tre, in the province of Khanh Hoa. What does the potential addition of these two casinos tell us?
Shaun McCamley: I think it’s a very positive story that the Department of Finance is looking to at least go in that direction, but we also have to keep in mind when we hear these stories that there’s a long way to go, because also powerful as is the Ministry of Finance, the real power belongs to the Politburo and if the Politburo is not on board, nothing will happen. And as we’ve seen in the past, the Politburo is not supportive of gambling in any form. I hope that’s an indication that things are changing, but I wouldn’t hang my hat on that.
IAG: The pilot program was launched in 2019 with Corona Resort & Casino in Phu Quoc, while a second casino named to the program at the same time in Van Don province has yet to open. Have we learned a lot from the first three years?
SM: It’s been very difficult to get a positive overview, but I’m looking at it from a high level.
Really, the government has always been conservative in its approach to gambling and providing gambling to the local population. Corona and the province of Van Don to the north were chosen because they are quite isolated and difficult to access for locals. For example, it’s a 40 minute flight from Ho Chi Minh City to Phu Quoc and a 40 minute drive from there to the property. To be honest, it’s also not a very good drive – it passes the biggest landfill on the island – so the driver was never going to prove the real value of what the people of the town can bring. property.
But it is a positive step. My view is that you turn on the tap and it’s a drip process. We’re still two drops away, and we still have a long way to go before we can talk about anything opening up.
IAG: The two proposed new casinos are located in Da Nang City and Hon Tre Island in Khanh Hoa Province. What do you know about these two evolutions?
SM: If you look at the first in the Ba Na Hill area in Da Nang, there is already a very large development group there. [The project’s investor] Sun Group is also one of the biggest property developers in Vietnam, and they have already worked with Steelman Group to come up with a master plan. The plan I was only recently looking at details four distinct areas and in one of them is a casino with a fairly large floor area of around 8,000 square meters. They are looking at a hotel room capacity of around 3,000 keys, so this is quite a large property.
The other development further north concerns VinPearl. These are the two largest groups in Vietnam. They are very Vietnamese in their ownership, which I think also sends a message that the government is ready to support Vietnamese-owned businesses above all else. There is a clear message in the fact that two other properties have not been mentioned.
IAG: The two that haven’t been mentioned are Ho Tram and Hoiana. Should they be worried?
SM: I think that’s the clear message, and what I take away from doing business for many years in Vietnam is that the government clearly supports local interests over international interests and they will always come first when the government seeks to expand these programs. It’s such a shame because Ho Tram is a beautiful property in a great location. Hoiana is also a beautiful, good sized property with a significant investment. The result was breathtaking. It’s hard to criticize anything about how these properties have been laid out or how they are run, but it is very, very difficult, and I can tell from my own experience. It is a very difficult landscape for a foreigner doing business in Vietnam.
I used to call doing business with Vietnamese officials the “elastic mentality”. What I mean is that they are the absolute masters of negotiation. We would still have price hikes every month in everything, whether it’s water, electricity, resources – they would always raise prices. As a responsible manager looking to protect the interests of shareholders, I had to negotiate, but they would stretch the rubber band to the breaking point where you just threw your hands up and walked away – then they let go the elastic just a little bit. Then you would know that next month you would be in the same process.
I always thought the Chinese were great negotiators, but the Vietnamese – very, very difficult to deal with as foreigners.
IAG: Is the foreign-only casino model sustainable?
SM: It is very difficult to succeed under the foreigner-only model. It’s very, very difficult. You need the local market if you want the business to meet its budget and goals. I have to say it’s even more difficult today with COVID and the restrictions China has imposed on its citizens.
IAG: Is the minimum investment level of US$2 billion for foreign companies wishing to develop an integrated resort with a casino too high?
SM: I always said it was too high and unreasonable. The numbers we’ve always talked about are more around the US$400-500 million mark, and in today’s market that’s even more relevant given the added challenges of getting players to the table to play.
For $500 million you still get a really good property. You don’t necessarily need the 18-hole golf course that comes with many of these IRs. It does not generate revenue. Of course it helps – it’s an additional tool in the toolbox – but today technology also helps us in what we can do to generate revenue for our businesses. Proxy betting, phone betting – it’s been around for a long time, but we know how much revenue it brings. For some properties, 75% of their income is contributed by proxy.
IAG: Is there potential for the local market in Vietnam?
SM: I think we are currently looking at limited potential. We saw two great properties struggle. Ho Tram is effectively a real estate company now – it really has no significant contribution from the game. I’d love to say that Hoiana wouldn’t be in the same box, but it’s hard to say that’s not the case, if we are brutally honest. It looks like it will be a real estate development in terms of basic income, because I don’t see how the game can do that.
There is therefore a long way to go before we can consider the arrival in Vietnam of well-known integrated resort developers like Wynn. Until they open up with a non-foreign model and allow locals, I don’t think there will be any other major investments in the country.
It’s a shame because it’s such a wonderful country and there could be a lot of opportunities here, but the government puts a lot of restrictions on foreign companies entering the country. It seems to me that the message from the Department of Finance is that they have identified two major local groups and that is where they are going to look for development. Why bring in a stranger when we have him at our back door?
IAG: Finally, Shaun, do you think we’ll ever see the local gaming market really open up in Vietnam?
SM: I honestly think it’s a long way down the track to see this. There are four social evils considered in Vietnamese culture and gambling is probably the first with drugs, prostitution – the usual suspects. Until the Politburo changes its way of thinking, I don’t think that will happen.
We have to look at the government structure in Vietnam where the Politburo is like the board of directors and the prime minister’s office and the other ministries are like the executive. They just follow the Politburo directive and if the Politburo does not give final approval, nothing will happen. This is the story of Vietnam. Nothing happens without advice from the Politburo, and there are a lot of anti-gambling people in the Politburo.