New e-gaming rules alter the betting scene

Under Decree No.175/2016/ND-CP, issued on December 30, 2016, amendments were made to some clauses of the previous law-Decree No.86/2016/ND-CP on businesses in prize-winning electronic games for foreigners. With the new legislation, electronic gaming machines (EGM) now have to be 100% new, with technical specifications clarified by the manufacturer, and certified by independent certifying agencies operating in G7 countries.

The new decree maintains the prohibition on Vietnamese nationals entering gaming facilities, as regulated by Decree 86.

Five-star or equivalent hotels and resorts are free to open electronic gaming services as long as they are in a separate facility and adhere to specific security requirements. Hospitality businesses with less than five stars will no longer be allowed to operate such services.

Notably, the legal slot machines installed in such facilities nationwide would need to be modified to offer a payout percentage of 90%. Authorised operators would have to obtain re-certification by the government to prove their slot machines meet the new conditions.

Prof. Augustine Ha Ton Vinh, investment consultant for Van Don Special Economic Zone and Casino Complex in the northern province of Quang Ninh, said, “Although the new decree tightens conditions on gaming machines, it is a significant step forward in the development of the Vietnamese gaming industry.”

Vinh said the new decree gives more detailed guidance compared to the last one, the core change being new restrictions on the use of EGMs, including a requirement that all EGMs, including a requirement that all EGMs offer a payout percentage of at least 90%. This rate is not specified in the last decree which made huge profits for investors.

Also, according to the Ministry of Finance, the new guidelines are much needed, as the old policy is archaic and not comprehensive enough to manage such a complex business.

The change forced Hong Kong-listed Success Dragon to terminate one of its two deals with two slot clubs in Vietnam for the provision and management of EGMs, following difficulties both clubs encountered when trying to obtain business certificates, according to its website last week.

In December 2015, the company announced that it had reached deals with the two slot clubs-one located in Le Meridien Hotel in Ho Chi Minh City, the other at One Opera Hotel in the central city of Danang-to provide the investment and operational management of the EGMs for the clubs.

“Both Le Meridien and One Opera have encountered unexpected difficulties in obtaining the requisite business certificates for the operation of an EGM business,” said Carlos Luis Sakas Porras, Success Dragon International Holdings Limited’s chairman and executive director.

Success Dragon further warned that there had been “a core change of Vietnamese laws in respect to EGM” that contributed to the company’s current problems. It said it is in the process of discussing and negotiating with the Le Meridien slot club for a new cooperative approach.

“The board considers that the termination has no material adverse impact on the business operation and financial position of the group,” the company stated. It added that further announcements would be made if there were any future developments regarding the deals.

Electronic gaming services were first allowed in Vietnam in 1992, and since then, many gaming businesses have received licences nationwide.