Vietnam casino legislation – where does Vietnam stand now?
Vietnam Casino legislation is really a new signal from the government in its effort to manage this sector. A long-awaited casino business decree No. 03/2017/ND-CP was finally issued by the government on 20 January 2017, allowing local Vietnamese to gamble for the first time in history.
The long-awaited legislation
This Casino Decree allows local Vietnamese to play on a trial basis at specific casinos that have been approved by the competent authority. Many casinos are wanting to join this scheme, especially the ones located in the complex in Phu Quoc, Van Don and Ho Tram.
The government has also issued Decree No. 06/2017/ND-CP legalizing international betting on soccer, horse racing and greyhound racing.
The issuance of these decrees is a government attempt to retain casino operations tax revenue and limit foreign currency loss to other neighboring countries. Vietnam loses approximately $ 800 million in tax revenue annually from gamblers crossing the border to Cambodia, according to a survey.
The loss may continue to rise if the restrictions applied to local Vietnamese are not fully lifted, as Vietnam’s rich population has grown faster than any economy in the world (320% between 2006 and 2016) and is expected to continue to grow by 170% between 2016 and 2026.
In the midst of rising tourists, especially mid-income and high – income tourists in Vietnam, these decrees take effect. The government is expecting a growing number of Macau, Hong Kong and China gamblers to switch to Vietnam this year.
Nearly immediately after the Casino Decree was issued, many foreign investors are experiencing déjà vu. Vietnam’s casino market has the opportunity to grow such as Las Vegas Sands (U.S.), Chow Tai Fook (Hong Kong) or Sun City (Cambodia).
Although a 3-year trial period is set out in the Casino Decree, most of the investors do not wait until such period lapses. The casino decree is the best opportunity they’ve ever had until now. They’ve been waiting for it for so long. It could be risky to invest as no one knows what might happen after these three years. However, as has been said, the opportunity is out there, and investors should rush to meet the 3-year deadline.
The Casino Decree sets rigorous conditions for foreign investors to qualify for the Certificate of Registration of Investment in Casino – including Entertainment Complex, including the requirement that the project contains at least hotels, service, tourism, commercial and entertainment areas and conference centers.
The minimum investment capital must be USD 2 billion. Thus, it will take them about two years to apply for the license and build the complex for new investors. To meet the requirements of the Casino Decree, existing investors in Vietnam will need at least one year to expand the project.
The pilot casinos
In the race to Vietnam’s casino market, the Ministry of Finance has just issued documents to consult ministries and departments on Phu Quoc casino’s appraisal results. The Phu Quoc casino will be the country’s largest casino business complex after licensing with a 20-year business license, 100 card tables, and 1,000 prize-winning game machines.
The Phu Quoc Casino is part of an ecotourism complex that Phu Quoc Tourism Investment and Development Joint Stock Company is investing in. The total registered investment capital is about $ 2.24 billion, so far, the project has disbursed $ 1.24 billion, reaching 55.2 percent of the registered capital.
The scale of Phu Quoc casino business, according to investment registration, is 200 gaming tables and 2,000 prize-winning electronic game machines, but based on the disbursement progress, the Ministry of Finance proposed granting certificates for 100 tables. Playing cards and 1,000 electronic game machines first.
This type of operation was clearly defined by the Casino Decree, as there are two types of gaming machines:
1. Gaming machines used for prize-winning business.
These are defined as gaming machines with prizing programs and special equipment for casino games. Prize-winning electronic gaming machine means a specialized electronic device to play prize-winning games installed. The playing process between players and machines is completely automatic.
If an investor wants to do business in Type 1 gaming machines, they must have a business conditions satisfaction certificate issued by the Ministry of Finance. One of the conditions to get such a certificate is they must have a “tourism residential establishment which has been classified as five stars or higher by the competent authority.” An investor then needs to cooperate on a BCC contract basis with such hotels in Vietnam.
2. Gaming machines which the players receive prizes that cannot be converted
Prize not to be converted into cash or kind any form, or to be converted into small things such as toys, candies, etc.
If an investor wants to do business in Type 2 gaming machines, there is no restriction on foreign ownership. However, the machines must meet specific technical requirements and if they intend to open a gaming shop, they must also comply with the legal conditions.
Opportunities and restrains
According to the Ministry of Planning and Investment forecasts, the attraction of casino business is enormously in the first five years (2017 – 2020), Phu Quoc Tourism Investment and Development Joint Stock Company is paying about $ 1 billion of casino business taxes.
In particular, the total corporate income tax paid by the project in 5 years (2019 – 2023) has already reached about USD 195 million. To trade a table and 10 betting machines, investors must invest about USD 10 million.
But money alone is not enough, the Ministry of Finance has confirmed that the Phu Quoc casino has met all the conditions to go into operation so far. But all the location of Phu Quoc casino casinos and prize-winning game machines must be isolated from other recreational areas of the complex.
Specifically, gaming tables and award-winning electronic gaming machines are located on the first floor of the Main Casino area, the mezzanine of a 4-star hotel, and the 5-star Sky Casino area on the 8th floor. These two areas are connected with separate doors by separate corridors and lifts.
Meanwhile, the Vietnam casino business is also treated as a conditional business sector whose satisfaction is evidenced by casino business conditions satisfaction certificate (“Casino Business License”).
Local Vietnamese will be allowed to play if they are 21 or older and have a monthly salary of VND10 million (about US$ 440) or more, just to name a few conditions.
Growing mid- to high – income, people will have more demand for high – class integrated resorts. If the Vietnamese are allowed to play, development in integrated casino resorts is a smart decision to make a profit in Vietnam. The government will also benefit from tax payments from these resorts and casino businesses.
You can read more about casino projects in Vietnam in this blog.