Vietnam ministry defends computerized lottery against traditional rival
The newly-launched American-style computerized lottery in Vietnam is running with transparency and doing no harm to its traditional counterpart, the Ministry of Finance asserted on November 23.
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The computerized lottery is a result of cooperation between Vietlott and an indirect subsidiary of Malaysia-based firm Berjaya Corp Bhd (BCorp), which was granted an 18-year investment license to operate the computerized lottery in the country in January.
Vietlott has since found four jackpot winners, with the respective pretax prizes of VND56.1 billion (US$2.48 million), VND71 billion (US$3.17 million), VND65 billion (US$2.9 million) and VND92 billion (US$4.11 million).
With three jackpots having been won this month alone, while the jackpot probability is one in 8.1 million, the computerized lottery has come under suspicion over its transparency. It has also been blasted by traditional lottery companies, who say the new lottery is eating up their market share, especially in southern Vietnam.
The traditional lottery has a top prize of only VND1.5 billion (US$67,000), with 21 lottery companies operating in southern Vietnam recently announcing a joint plan to raise the prize to VND2 billion (US$89,300) next year.
All of those issues around the new kind of lottery were addressed at a media meeting held on Wednesday by the finance ministry at its headquarters in Hanoi.
Why a foreign partner?
The ministry has indeed received a number of questions from the press regarding the operation of the computerized lottery.
One of the questions was why a foreign partner is allowed to jointly run the computerized lottery, whereas the law says that lottery is a service exclusive to the state.
In response, Vietlott deputy CEO Nguyen Thanh Dam said Berjaya Corp is only indirectly cooperating with Vietlott through its local subsidiary Berjaya Gia Thinh Corp, under a business cooperation contract (BCC) worth some US$210.58 million.
Dam claimed the BCC between Vietlott and Berjaya has nothing to do with the equity of the company, which is still 100 percent owned by the finance ministry, adding that the foreign partner is only in charge of equipment investment and procurement in the joint venture.
“By the time Vietlott was launched in Vietnam, not a single local manufacturer had been able to produce the machines, equipment and technology solutions needed to run the computerized lottery,” Dam said.
Nguyen Hoang Duong, deputy head of the finance and banking bureau under the finance ministry, also said the ministry had to partner with a foreign entity to run the computerized lottery because “Vietnam is inexperienced in this new business model.”
“The cooperation helps Vietnam leverage the experience and technology of the foreign partner as well as sharing losses if the business proves unsuccessful,” Duong said, adding that the finance ministry obtained government approval for the partnership in 2011.
Duong, however, refused to disclose the share of revenue the Malaysian partner enjoys from the Vietnamese business, saying it is “confidential information both sides have agreed not to make public.”
Tax problems
As per current law, traditional lottery companies have to give 100 percent of their revenue to the budget of the local administrations where they are based.
Duong said Vietlott will do the same, but in a different manner.
“Vietlott is required to pay a 15% excise tax and a 10% value-added tax,” he said.
“After excluding these taxes and tax-deductible expenses, the company will continue paying a 20% corporate income tariff for the remaining revenue.”
Duong said Vietlott will also contribute the post-tax revenue to the local budget of the provinces or cities its agents are based. The company is present in nine cities and provinces, including Ho Chi Minh City, Can Tho City, An Giang Province, Binh Duong Province, Dong Nai Province, Ba Ria-Vung Tau Province, Khanh Hoa Province, Dak Lak Province, and Da Nang City.
Vietlott raked in VND734.4 billion (US$32.79 million) in revenue between July 18 and November 20, and has paid its winners a total of VND226 billion (US$10.09 million), according to Duong.
The company’s tax payment had topped VND85.5 billion (US$3.82 million) as of the end of last month.
Addressing concerns that Vietlott would ‘steal’ buyers from the traditional lottery, Duong said the computerized lottery in fact “has little impact” on its well-developing traditional counterpart.
“Twenty-one traditional lottery companies in southern Vietnam post a collective revenue of VND240 billion [$10.71 million] a day, while Vietlott sells only four million tickets per draw,” Duong said.
The Vietlott jackpot combination is randomly selected every Wednesday, Friday, and Sunday. With the computerized lottery fetching VND10,000 each, the revenue in its each selection is VND40 billion ($1.79 million).
“Vietnam’s lottery sector is estimated to rake in VND75 trillion [$3.35 billion] this year, and computerized lotteries only account for 1.3 percent of the total figure,” Duong concluded.
