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Legal Update

Vietnamese Still Not Permitted to Enter Gambling Centres

22 August 2013
Mayer Brown JSM Legal Update

Under the recently promulgated decree 86/2013/ND-CP on management of electronic gaming with prizes (Decree 86), the Vietnam government maintains its position that Vietnamese shall not be allowed to enter electronic gaming with prizes centres (Electronic Game Centres).

Commentators say that by banning Vietnamese from entering Electronic Game Centres and casinos, the state budget has missed out on a big source of income and the country continues facing "foreign currency bleeding" because a lot of Vietnamese have to take foreign currency abroad to gamble. In practice, a lot of licensed Electronic Game Centres, which cannot attract enough foreign travellers, have been admitting Vietnamese people underhandedly.

Decree 86 clearly points out that an electronic gaming with prizes service is a conditional type of business which is not subject to any incentives in taxes or fees. Only five-star (or high class ranking) accommodations for tourists would be licensed to run Electronic Game Centres which must be separated from other business areas and have their own entrance and camera system.

The number of gaming machines that an Electronic Game Centre is allowed to operate shall be based on the ratio of 1 machine for every 5 accommodation rooms. Besides their Investment Certificate/Business Registration Certificate (Business Licence), enterprises operating Electronic Game Centres must obtain a supplementary licence evidencing that they have met all conditions to conduct such line of business (Supplementary Licence). A Supplementary Licence would be valid for a maximum period of 10 years only unless clearly stated otherwise in the enterprise's latest Business Licence issued before 31 December 2012, i.e., before the promulgation of Decree 86.

Violations of the regulations shall be subject to fines of up to VND200 million. The maximum fine seems too small compared to Electronic Game Centres' revenue of hundreds of billions of Vietnamese dong every year. However, enterprises could also have their licence suspended, which would be the biggest threat to them.

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