The Opportunity
This section is drawn largely from excerpts of an Independent Experts Report carried out by MacCallum Consultants Ltd of Sydney and subsequent Government reports and industry sources including a recent Beijing University study of Lottery activity in Mainland China.
“If there were a Jewel in the Crown of opportunity for online lottery contracts remaining available in Asia, Vietnam would be that Jewel.” (MacCallum Associates) The lack of local capital and expertise available to run high technology based lottery operations creates a business opportunity that would not be available in any other market of similar size in Asia.
Vietnam is a country of over 80 million inhabitants with an estimated 3 million taxpayers only. Lotteries have existed in Vietnam since the 1930’s and are well accepted with no discernible social or religious opposition unlike some other Asian countries. Lotteries represent an acceptable form of indirect taxation and the Vietnamese Government is most anxious to increase its tax take through a modern on-line lottery in order to finance necessary infrastructure and social projects for its young and growing population. The traditional paper lotteries currently in place are cumbersome to operate and provide too many opportunities for slippage, a drawback leading to lower revenues for the Government.
Audited figures show that the paper based classic lotteries being run by the Government, in the area of Ho Chi Minh City alone, generate revenues of over US$500m per year (last audited figures from 2004). Where old-fashioned paper lottery games have been replaced by modern on-line games in other markets, including Asia, total sales have increased by a factor of 3 to 5. This can be more in some cases, China for example (Beijing University Study).
Recent Government figures estimate that over the next few years that potential lottery sales in Vietnam, given a well-structured portfolio of on-line lottery games, could reach US$ 2 Billion per annum. This represents lottery sales of some 25 US $ per capita on a national basis (population of 80m). Given the spread of wealth in Vietnam this revenue would come primarily from the much more well off Vietnamese and primarily in the more urban areas such as Hanoi, Da Nang and Ho Chi Minh City and surrounds. Recent information from the Vietnamese Ministry of Finance shows that Vietnam lottery revenues for the existing paper lotteries exceed US $ 1.2 billion nationwide (figures for 2006).
Official Vietnamese 2007 estimates of average GDP per capita income is US$2600 or almost double the average for Vietnam from 2001 (2007 world fact book). The major cities of Ha Noi and Ho Chi Minh City are estimated to have a GDP per capita almost double of the country.
Finally, the mobile phone market is expanding rapidly, currently over 30 million mobile phones are registered and the government estimates this number to approach 50 million by 2010.
Sports Betting
The Vietnamese Government and others have estimated that illegal sports’ betting in Vietnam generates a turnover of approximately US$1 billion a year, all of which run underground. The government has had discussions about regulating this activity.
Clearly a market exists for sports’ betting in Vietnam. Illegal soccer betting is extensive across the region in Hong Kong, Thailand and Malaysia. In 2001 Singapore legalized Soccer Betting and achieved weekly sales of Sing$10m. Developing the right products will take some time and will probably only be implemented when the mainstream online Lottery is fully up and running. In any case, the new generation of machines being installed will be scalable and allow the progressive integration of sports betting alongside the mainstream online Lottery. With an economically viable lottery operation sustaining the business, the systems and operational costs will be covered and any additional revenue from sport’s betting may be considered incremental to the corporation's primary source of revenue.