Saigon lottery firm fails to match the numbers as profit plunges to 5-year low

Vietnam's state-run lottery companies have been bleeding red ink over the past year following the launch of an American-style rival that offers significantly bigger prizes.

The Ho Chi Minh City Lottery Company Ltd. reported its worse performance since 2013 in the first six months of the year. The VND480 billion ($21.1 million) it netted in pre-tax profit was down 9 percent from the same period last year, and revenue between January and June rose less than 2 percent.

The company said it spent nearly VND1.7 trillion or 75 percent of its six-month expenditure on paying out winners.

In a business report issued in late May, company executives said it was losing out to Vietlott, the new player in the market.

The company said it will try to win back business by focusing on its core area in Saigon and adjusting its strategy in nearby provinces.

Vietnam is very strict on gambling, but lottery tickets have always been popular.

The traditional lottery in Vietnam offers tickets with predetermined numbers printed on them and a top prize of VND2 billion ($88,000), and that was raised by 33 percent rise at the beginning of this year in a bid to make it more attractive.

Around 856 million traditional lottery tickets worth VND66.68 trillion ($2.9 billion) were sold in southern Vietnam last year, according to media reports.

In a move that upended the market, Vietlott, or the Vietnam Computerized Lottery One Member Limited Liability Company, signed an exclusive 18-year contract with Malaysian conglomerate Berjaya in January last year to launch computerized lottery games.

Mega 6/45 is the company’s first foray into the market and debuted in July 2016. Players select six numbers from 1 to 45 and win the jackpot, starting at VND12 billion ($528,000), by matching all six winning numbers from the draw. Each ticket costs VND10,000 (40 cents), the same as the traditional lottery.

The jackpot rolls over each week until there is a winner. The highest jackpot to be paid out in Vietnam was VND159 billion ($7 million), while the country's average annual income was $2,200 last year.

The finance ministry is thinking about raising the tax rate for anyone who wins more than VND10 billion from the current 10 percent to 30 percent.