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Cover Story<br />
Brisbane consortium led by Australia’s Echo Entertainment which<br />
was awarded the Queen’s Wharf IR development project in July,<br />
reportedly has taken a majority stake in the Vietnam project’s revival.<br />
Suncity is believed to have a small piece, in exchange for providing<br />
customers from its database. The proposed IR site is some two hours<br />
by road from the nearest international airport in Danang, which gets<br />
four flights a day from Macau. Danang’s Crowne International Club<br />
regularly receives Macau junket players and is located on the grounds<br />
of a four star beachfront hotel.<br />
Vietnam requires IRs to invest US$4 billion, acceptable in phases.<br />
Hoi An South’s US$500 million first phase, planned to open in 2017<br />
or 2018, is expected to have a casino with 90 tables, a hotel and golf<br />
course. Vietnam permits gaming for foreign passport holders only.<br />
However, the government’s long awaited Casino Decree, expected<br />
imminently for nearly two years, may include some provision for<br />
limited local play.<br />
Looking at the three junket promoters’ initial moves into casino<br />
ownership, some common themes emerge. Most notably, junkets<br />
favor low tax jurisdictions. Saipan has no gaming tax. Clark offers a<br />
discount on the Philippine’s already low rates — 5% for VIP play and<br />
17% for mass market. Vietnam has a nominal tax rate of 30%, rising<br />
to 35% on January 1 accompanied by a corporate tax cut from 22%<br />
to 20%. But it allows commissions to be deducted from revenue, so<br />
Vietnam’s effective tax rate under the new rules will be an estimated<br />
17%. South Korea levies total 14% for foreigner-only casinos. “Lower<br />
taxes mean better rebates and commissions,” Tony Tong says, plus<br />
more profit into the operator’s pocket.<br />
As owners or promoters, junkets favor jurisdictions with liberal<br />
regulatory regimes. “Southeast Asian countries are more open<br />
minded about proxy betting, phone betting and online betting, which<br />
is unavailable in Macau,” Mr Tong says. With live video streaming<br />
from casinos and online gaming licenses available, he estimates offsite<br />
play constitutes 30% of VIP revenue in the Philippines.<br />
Pagcor has evolved as a regulator since 2004, when Jimei got<br />
its license, to the point where Caesars thinks it can have a Manila<br />
casino without risk to its US operations. Jimei has adapted to<br />
changing rules there as well as Macau. In Vietnam and Saipan,<br />
authorities are still creating regulatory regimes, though Saipan is<br />
subject to US federal law.<br />
Like other resort developers, junkets want attractive destinations.<br />
Quang Nam and Saipan have pristine beaches and are near historic<br />
areas including ancient temples in Vietnam and the atomic bomb<br />
launch site in Tinian. Fontana offers an escape from urban drudgery<br />
with greenery, golf and nearby mountains.<br />
Some things don’t seem to matter to junkets moving into<br />
casino ownership. While the Philippine market supports Fontana’s<br />
gaming and non-gaming segments, the newcomers don’t seem<br />
interested in local play. Korea and Vietnam are essentially<br />
foreigner only markets, while Saipan has just 50,000 people.<br />
Again excepting Fontana at Clark, easy commercial air access also<br />
doesn’t seem to be a major consideration. Junkets seem confident<br />
that they have the players and can get them to their destinations<br />
with the right incentives. Increasingly, they’re willing to put their<br />
money on it.<br />
“Vietnam requires IRs to invest US$4 billion, acceptable<br />
in phases. Hoi An South’s US$500 million first phase,<br />
planned to open in 2017 or 2018, is expected to have a<br />
casino with 90 tables, a hotel and golf course.”<br />
<strong>December</strong> <strong>2015</strong> inside asian gaming 13