Wednesday, August 13, 2008

Vietnamese people spend $2bil/year on betting: MOF

15:32' 12/08/2008 (GMT+7)

VietNamNet Bridge – Vietnamese people spend some $2bil a year on football betting, lottery and gambling, cock and buffalo fighting, lottery games on TV and Internet, according to an official from the Ministry of Finance (MOF). The ministry is planning to legalise the extralegal activities, but with very cautious steps.

Illegal gambling everywhere

In a recent survey, MOF found out that illegal gambling activities are being carried out in public under the mode of game shows. The programmes are organised by radio and television, press agencies and internet service providers. The prizes for the programmes are paid in kind or cash with big value after organisers get big profit from the programmes as clients have to pay SMS fees much higher than normal.

The SMS fees for joining the games may reach VND10-15,000/SMS, while the normal level is just VND400/SMS. The financial scales of the programmes are very big. In the World Cup season, organisers can get the turnover of several hundred million VND a day from the messages.

The activities, according to the Ministry of Finance, are illegal if considering the Commercial Law and Decree 37 guiding the implementation of the law.

According to the Ministry of Public Security, illegal gambling activities began increasing in 1996. People bet tens of billion VND on every football match in World Cup season, Euro or British, German, Italian and Spanish champions’ leagues. In the period of 2001-2005 alone, the police discovered 495 cases of gambling involving 4,187 people, seizing over VND10bil, $250,000 and other assets.

Putting everything under control

To date, there are two licenced betting service providers, and both of the organisations are operating in the south.

One of the two is the BCC (business cooperation contract) between the Phu Tho Sports Club and Thien Ma Company, related to horse race betting in HCM City. Under the BCC, valid from 2003 to 2010, Thien Ma and Phu Tho Club will share 55% and 45% of profit. In 2007 alone, the turnover from the Phu Tho horse race course was VND164bil.

The second project is a joint venture between Ba Ria-Vung Tau Travel Company and UK-based Hemlock Services Corporation, which has the legal capital of nearly $5mil. The service provider specialises in dog race betting in Ba Ria-Vung Tau.

As such, the total turnover of the two licenced service providers was just VND170bil, or over $10mil, a very small figure if compared with the MOF’s turnover estimate of $2bil.

Meanwhile, another project, a joint venture with the investment capital of up to $120mil, has not become operational in HCM City, though it was licenced in 1999. Relevant agencies are considering revoking the licence as the Vietnamese partner in the joint venture, the Binh Chanh Construction Joint Stock Company, has withdrawn from the entity.

Another project, which had its licence revoked in 2007, was the joint venture between Hanoi Tourism, Sports and Services Company and French Trotting Promotion. The failed project planned to build a horse race worth $57mil in Hanoi.

The Vinh Phuc People’s Committee also asked the Prime Minister to licence G.O. Max I&D, a 100% foreign-invested horse race company, which plans to inject $570mil in a project in Vietnam.

However, the project will not be licenced until there is a legal framework for this kind of activity.

Legal framework, which one suitable?

MOF is compiling a plan to control gambling activities in Vietnam.

The compiler suggests not licencing more betting service providers in the south, as there are two operational providers already. Moreover, the investors of the two projects will have to increase their legal capital to VND100bil.

The compiler suggests licencing one service provider in the north, the one suggested by Vinh Phuc province. The service provider must have the legal capital of VND1,500bil and build other entertainment systems to serve the public’s interests.

MOF has also proposed licencing a football betting company which has the chartered capital of VND500bil, 100% owned by the state.

Nguyen Ngoc Anh, Deputy Director of the Banks and Financial Institutions Department under MOF, said that as these are not encouraged activities, they should be put under strict control.