Originally published on February 28, 2007
The Wall Street Journal
By Alex Frangos
Michael (‘Mike’) Aymong hopes to make a remote stretch of beach in Vietnam into the next Asian gambling hotspot, bringing the best of America to Vietnam.
An international group of developers [including Michael Aymong] hopes to make a remote stretch of beach in Vietnam into the next Asian gambling hotspot.
Asian Coast Development Ltd. of Toronto, with partners Fontainebleau Resorts, a U.S. resort developer; and Paul Steelman, a Las Vegas-based casino architect, are slated to take part in the planned resort, which awaits approval by the Vietnamese government. The group is proposing a $4 billion resort and casino in a single-party Communist state that tends to attract more backpackers than high-rollers. It would encompass an undeveloped stretch of beach and forest in Xuyen Moc, Ba Ria Vung Tau province. The project, dubbed Ho Tram, would be situated on the South China Sea, a two-hour drive east of Ho Chi Minh City.
“We want to bring the best of America to Vietnam,” says Michael (‘Mike’) Aymong, chairman of Asian Coast. Fanciful plans for the project’s first phase feature 10 restaurants, a Greg Norman designed golf course, an 8-acre swimming pool, 1,200 hotel rooms and an 80,000 square foot Las Vegas-style table games casino. The resort’s theme would be a “lost city of Vietnam,” he says.
During the Vietnam War, the area was mostly out of the fighting and served as a seaside recreation area for American and Australian troops. Later, the capital of the region, Vung Tau, was a launching place for the Vietnamese “boat people” who fled the communist regime in the 1970s and 1980s for places such as Hong Kong.
The project has been in the works for three years. Developers say they have a 50-year lease from the government on the 3.5 kilometer long beachfront site. (All land in Vietnam is officially owned by the “people” and administered by the government.) The government will generate money through the land lease and from a cut of the gambling revenues.
Asian Coast’s development could still fail to get off the ground. The company is waiting for a final green light from the prime minister’s office in Hanoi, expected in the next 30 to 90 days. Asian Coast would begin construction on the $500 million first phase within three or four months after approval and would open two years after that.
There are a handful of small casinos in northern Vietnam, but gambling is still a nascent industry there. The country’s lack of a legalized and regulated gambling system has discouraged major U.S. operators like Harrah’s Entertainment Inc., MGM Mirage, Wynn Resorts Ltd. and Las Vegas Sands Corp. from moving into the country. To teach Vietnamese government officials about the industry, Asian Coast organized a tour of gambling sites in London, the Bahamas and the U.S.
In other parts of Asia, casino construction is on a roll. In the Chinese gambling enclave of Macau, gambling revenues surpassed those of the Las Vegas Strip last year. Two mega-resort-casino projects are just getting underway in Singapore. There is speculation about casinos popping up in Japan, and eventually in mainland China.
While Asian nations — including Vietnam — are exploring casinos as a way to generate new revenue, American casino companies remain wary of new markets because of regulatory issues back home. U.S. state casino regulatory agencies must approve foreign casino projects if American companies operate gambling halls in their jurisdictions.
Despite hurdles on the home front, all four major U.S. operators have for years jockeyed to get into one of Asia’s most promising gambling markets: Macau. When the former Portuguese colony reverted to Chinese control in 1999, the Chinese kept the lucrative gambling industry there and decreed that it would be the only place in China gambling was legal. In 2002, the Chinese government broke a longstanding monopoly held by local tycoon Stanley Ho and opened the island to foreign competition.
Currently, Las Vegas-based Sands and Wynn are the only two U.S. casino firms with casinos up and running in Macau. MGM Mirage is planning two gambling resorts in a joint-venture with a Hong Kong-based partner. (Yesterday, MGM Mirage and its partner attended a Gaming Control Board hearing in Las Vegas as part of the process to win approval of the partnership.) Harrah’s, for now, is locked out of the island since it did not receive a casino license to operate in Macau.
Macau’s growth in the past few years has been stunning, thanks in part to visitors from Mainland China. In the 12 months that ended January, the territory saw 22.4 million visitors, up 18% from the year earlier period, according to the Macau government. And while that number is still dwarfed by Las Vegas’s nearly 39 million visitors last year, Macau’s 2006 gambling revenue of $6.95 billion, for the first time, topped gambling revenues on the Las Vegas Strip.
Beyond Macau, the gambling industry’s next big Asian target is likely Japan, whose parliament could vote next year to build casinos in two or three initial locations.
Larry Klatzkin, casino analyst at Jefferies & Co. in New York says companies are poised to act on any real opportunity. “Whatever is legalized next, they’ll be there,” he says.
—Peter Sanders and Thu Nguyen contributed to this article.
Write to Alex Frangos at email@example.com