Thursday, June 30, 2022

Addressing Vietnam's regulatory needs

As Vietnam takes steps to address gaming as a new industry, serving the development of tourism and a number of ancillary services, it is critical to highlight the need for a comprehensive legal framework.

The country needs legislation that regulates specific areas and nuances of the gaming industry in order to make it work, attract investment, develop the economy and above all follow international standards.

Currently the only gaming legislation in force in Vietnam is Decree 86/2013 on Business of Electronic Gaming for Foreigners, which covers so-called slot parlours. This is supplemented by Circular No.15/2014/TT-NHNN issued by the State Bank of Vietnam containing instructions on the Management of Foreign Exchange for the Gambling Business for Foreigners and Circular No. 11/2014/TT-BTC issued by the Ministry of Finance, regulating some of the provisions of Decree 86.

Most of these rules are operational in nature and fall short of establishing a regulatory framework that could be extended to other forms of gaming.

The legal backbone of the gaming industry should be the Gaming Decree (to be approved) containing the basic structure for the operation of casino games of chance.

Other relevant gaming rules should be contained in additional rules and regulations, of which we believe the more important and necessary for completeness are:

1. Gaming tax specific rules and regulations. There should be a special set of rules for the gaming industry that addresses very particular forms of revenue and losses linked with the operation of casinos which include, amongst others, the specific nature of gaming promotion services provided by the International Tour Operators.

It is quite relevant and much needed that specific tax legislation enacted for the gaming industry considers and accommodates the right level of taxation to represent a stable source of government revenue but at the same time contribute to promoting tourism.

2. ITOs. It is fundamental to address the specific nature of gaming promotion activities through a special set of rules containing the licensing regime applicable to the ITOs.

The gaming promoters’ rules and regulations set forth the requirements and procedures to engage and operate casino gaming promotion activities, which consist mainly in recruiting high-net-worth individuals and introducing them to the casinos.

The gaming promotion business has been nuclear to the gaming industry in Macau, channelling around 50 percent (it used to be close to 75 percent, a couple of years ago) of the total Macau gross gaming revenue (GGR) to the casinos.

3.  Gaming credit law. It is necessary to issue specific rules concerning gaming credit in order to allow proper enforcement of gaming debts. The possibility of enforcing gaming debts constitutes an exception to the normal regime under civil law systems, which qualify gaming debts as “natural obligations”, as opposed to “civil obligations”.

A "natural obligation" may be defined as an obligation that does not give rise to an action to enforce it, but that does have some cognizable legal effects. In fact, if the debtor pays the debt, such payment is recognized as extinguishing the obligation although the creditor was not entitled to obtain fulfilment of such obligation by the debtor.

On the other hand, civil obligations can be defined as the ones which bind in law and which may be enforced in a court of justice.

It is very important for gaming jurisdictions that the fulfilment of gaming debts is not left to a “moral or social duty”, as it could undermine the basis of the gaming industry’s business rationale and “harmonious” development and sustainability.

The most common form of undertaking gaming debts arises out of the concession of credit for gaming purposes: in fact, it is quite normal across the gaming industry for gaming operators to grant credit to their players in the form of making available gaming chips without receiving in money their face value.

A proper gaming credit law should, therefore, address the following legal topics:

- Recognizing that from the concession of credit for gaming purposes emerge civil obligations;

- The determination that the only form of gaming credit allowed is through the provision of gaming chips without a payment of the respective face value;

Not many other jurisdictions will recognize gaming debts and will allow for judicial enforcement of such gaming related arrangements, which raises a number of hurdles and legal obstacles in enforcing judgments that recognize the obligation to pay the gaming debts.

In Hong Kong, the courts recognized the enforceability of a gaming debt, in a “greenfield “decision, which awarded Wynn Macau the right to obtain payment from one of its gambling debtors.

4. Electronic gaming machine manufacturers approval process. In order to ensure the integrity of the electronic gaming machines (slot machines) we consider a critical point to have a set of rules concerning the approval of gaming manufacturers and the approval of electronic gaming machines and related equipment and gaming systems being supplied to the Vietnam market.

 5. Responsible Gaming. Responsible Gaming programs are growing in importance and constitute, today, a major milestone in developing the gaming industry towards a true entertainment environment.  All gaming operators should develop and implement responsible gaming programs and training in order to provide employees with important information related to problem gambling that might affect employees themselves, patrons, and the business so as to establish a responsible gaming environment and to minimize the negative impact associated with problem gambling on the community.

Responsible Gaming is, therefore, a legal and a policy issue that requires the Government and the gaming operators to work together to minimize the social issues of problem gaming.

Player’s information, control on advertising, upholding ethical and responsible marketing, providing the tools to determine an emerging problem, self-exclusion procedures are all important topics that should guide policy making and legislation in order to ensure a responsible gaming environment to which most of the gaming operators are committed these days by ensuring that gambling services are offered in a responsible manner.

6. Casino Games of Fortune Operational Rules. Each of the casino games of fortune or games of other forms is subject to a specific set of operational rules. The operating rules for the casino games of fortune are approved by the Government upon proposal by the gaming regulator.

7. Anti-Money Laundering Regulations. Growing in importance worldwide and within the gaming industry as well are the anti-money laundering provisions and internal controls requirements imposed on the day-to-day gaming operations.

There should be a special set of rules for the gaming industry, issued by the gaming regulator to define the minimal compulsory duties, rules and procedures for gaming operators, including corporate entities entrusted by their management, lottery or sports betting operators, and gaming promoters. Any breach of these duties can result in fines or administrative action from the gaming regulator.

8. Establishing a gaming regulator. In building a gaming industry framework and providing the structure for subsequent developments of the gaming legal regime, it is critical to establish a specific body, within the Government structure that should provide guidance and assistance to Government on the definition and execution of the economic policies for the operations of the casino games of fortune or other ways of gaming. 

9. Advertising. A specific regime should be established for advertising gaming. To what extent is the advertising of gambling permitted in this jurisdiction. To the extent that advertising is permitted, how is it regulated? I believe that it is important to institute a regime that protects responsible gaming and imposes adequate responsibility in formulating the advertising message.

* Luis has a wealth of over 23 years of experience during which he assumed a broad range of legal roles, extending from teaching law to advisory positions at Government’s highest level, senior corporate executive positions and private practice. For the last 12 years he has focused his practice in gaming law at a corporate level or in private practice. He was a Government Lawyer for the Macau Legislative Modernization Commission, legal Advisor to the President of the Macau Legislative Assembly and legal advisor for the Minister of Economy of Portugal. Currently he is the Chief Legal Officer for Asian Coast Development Ltd., an international development company specializing in integrated resort destinations.

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

3rd party / Cookies
Show settings
Contact us

PO Box 1139, Macau SAR
Tel: +853 2871 7267
Fax: +853 2871 7264

Asia Gaming Brief