VIETNAM - ELECTRONIC GAMING BUSINESS - WHAT YOU MUST KNOW

VIETNAM – WHAT FOREIGN INVESTORS NEED TO KNOW ABOUT THE OFFLINE GAME BUSINESS IN VIETNAM

Number and types of gaming machines

A foreign enterprise that engages in the offline prize-winning electronic game business must obtain Investment Registration Certificate and Certificate of Satisfaction of Conditions for a Gaming Business (“SC Certificate”). The SC Certificate will reflect the type and number of gaming machines that an enterprise is permitted to have. Circular 11/2014/TT-BTC (“Circular 11”) lists the following seven types of gaming machines that an enterprise is allowed to operate:

1.     Coin Slot Machines

2.     Roulette

3.     Automatic Baccarat

4.     Electronic Blackjack

5.     Sic Bo or Tai Siu Machines 

6.     Horse Racing and Mahjong; and

7.     Poker Machines

Items 2-7 above are permitted only if they are automated and do not require participation by members of staff.

The total number of gaming machines of the enterprise must not exceed the permitted number stipulated in the SC Certificate. In addition, the number of gaming machines belonging to each of categories 2-7 above must not exceed 15% of the total number of gaming machines operated by the enterprise. No maximum percentage is applied to coin slot machines.

Circular 57/2017/TT-BTC (“Circular 57”) requires the enterprise to lodge a report to the Ministry of Finance, local Department of Finance, local Department of Culture, Sport and Tourism and local Department of Taxation, describing the total number and type of gaming machines, including the ratio of each type, within 5 business days from the date of commencement of operation. Any variation in the number and type of each machine must also be reported to each of these Department and Ministry.

Back-up equipment for gaming machines

Under Circular 57, enterprises licensed with an SC Certificate are permitted to purchase back-up equipment for gaming machines. Enterprises can purchase the following items for replacement where necessary:

1.     Screens

2.     Cash and token receipt systems

3.     Prize payment systems

4.     Archiving systems

5.     Circuit boards

All back-up equipment must be 100% new and cannot exceed 10% of the number of gaming machines operated by the enterprise for which that item of back-up equipment would be used.

Where back-up equipment is used by an enterprise to replace items in gaming machines, that enterprise must keep detailed records specifying the type of gaming machine, the type of equipment and the reason for replacement.

Procedures to obtain a SC Certificate

An enterprise must satisfy the following conditions in order to apply for a SC Certificate:

-       Have an Investment Registration Certificate that states the business line for prize-winning electronic game business operation

-       Total investment capital of at least VND 200 billions

-       If the enterprise also operates tourist accommodation service, the tourist accommodation establishment must be of five-star class as ranked by a state agency

-       The facility for prize-winning electronic game business must be located separately from other business areas of the enterprise and must be equipped with 24/7 CCTV

-       The business facility manager must have at least a Bachelor’s degree and at least 03 years of experience in managing prize-winning electronic game business

-       The business facility must satisfy conditions on security and fire safety.

Application dossier for an SC Certificate includes: standard application form, copy of Investment Registration Certificate, site plan of the business facility, proof of the business facility manager’s competence, internal regulations on management, control, anti-money laundering and game rules.

Accounting system and reporting

Enterprises that operate electronic gaming equipment must conduct separate cost accounting for revenue, expenses and profit of its gaming business, and must separately monitor items related to the gaming business in its system of accounting books and financial statements.

Circular 11 requires an enterprise to submit to local authorities the following reports on a quarterly and annual basis:

1.     Financial statements

2.     Report on the number and type of gaming machines

3.     Report on the purchase, use, re-export or destruction of equipment of gaming machines

4.     Report on the status of operation of the gaming business

The issuance of Circular 11 and Circular 57, alongside the execution of legal instruments on casino business in Vietnam, indicates the Government’s increasing willingness in attracting foreign investors for the development of these gaming industries. Investors are strongly recommended to invest in Vietnam – one of the few global economies that manage to thrive flourishingly amid the Covid-19 pandemic and also the country with the fastest increase in the number of middle-class citizens in South East Asia.

For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann via email under [email protected] or via LinkedIn under Dr. Oliver Massmann. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.