As Vietnam takes steps towards legalising gambling for its own citizens, analysts warn of a threat to the bottom line at Cambodia’s premiere casino, NagaWorld, whose patronage depends largely on gamblers from neighbouring countries.

Local Vietnamese news agency Thanh Nien reported on Tuesday that the Vietnamese Communist Party’s Politburo had decided to allow Vietnamese “meeting certain criteria” to gamble in a casino to be built in the northern province of Quang Ninh.

The move suggests the government is leaning towards relaxing some, if not all, of its ban on Vietnamese nationals gambling in the country.

Analysts were quick to point out that a quality alternative in Vietnam may draw back those crossing the border to venture over to NagaWorld.

“From the long-term point of view, it is definitely negative for Cambodia and NagaWorld because 35 per cent of visitors actually come from Vietnam,” said Katherine Sun, an analyst at Morgan Stanley.

In its latest report on parent company NagaCorp, Morgan Stanley says that the newly opened casino Ho Tram, just hours from Vietnam’s Ho Chi Minh City, could potentially eat into NagaWorld’s market share.

The impact, the analysis says, would be limited due to the existing ban on Vietnamese gambling that urges players over the border in the first place. But the ban seems to be slowly easing up.

At NagaWorld, mass market (non-VIP) gamblers accounted for 75 per cent of its $111.5 million gross profit for the first half of 2013, according to the parent company’s website. More than a third of mass market gamblers are Vietnamese, analysts said.

“If Vietnam completely makes it free for their own people to gamble, it will definitely have a negative impact on performance,” said CIMB gaming analyst Michael Ting from Hong Kong.

Ting said the severity of the impact will depend on the type of customer being targeted. NagaWorld has a strong brand that “higher-end customers” are willing to travel for, Ting said. While overshadowed by NagaWorld, with its 130 tables and some 1,500 gaming machines, the majority of Cambodia’s casinos are located along the Thai and Vietnamese borders, another potential soft spot if changes are made in Vietnam.

Thanh Nien reported last week that police in the Vietnamese province of Long An said that 1,300 Vietnamese were crossing the border to gamble every day.

In the Cambodian border town of Bavet in Svay Rieng province, where 11 casinos are in operation, Tok Kimsay, an adviser to the Titan King Casino, said there might be a slight downturn, but the gamblers from China, South Korea, Laos and Thailand would plug any gap.

“I am not worried about that because we are open to all customers except our locals and we have a lot of markets besides Vietnam,” he said, declining to comment on the revenue share Vietnamese clients brought in to his casino.

NagaCorp representatives did not return several requests for comment.