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2 March, 2017
The long-awaited legal framework for casino businesses was adopted on 16 January 2017 under Decree No. 03/2017/ND-CP of the Government on Casino Business Activities (Decree No. 03), which will take effect from 15 March 2017 (Effective Date). Below are the salient points under Decree No. 03:
1. Permission for locals to game at casinos in Vietnam
As a 3−year pilot scheme, Decree No. 03 allows locals – meaning Vietnamese citizens residing in Vietnam who are 21 or older and who have a regular income of at least VND 10 million per month – to access and game at Vietnam-based casinos. In order to access and game in a casino in Vietnam, Vietnamese players must buy an entrance ticket at a cost of VND 1 million per 24 consecutive hours, or VND 25 million per month. The entire proceeds from selling these tickets shall be contributed to the State budget of the location where the casino's business is conducted.
Any company desiring to operate a casino (Casino Company) must issue an electronic card to every Vietnamese player to track their identities and any activities they undertake. Specifically, the card must record information about the player's code number, full name, ID/Passport number, identification photo, times of entry/exit from the casino, the amount of money used for playing and the amount of prize money for each occasion of playing at the business location.
2. Conditions and licenses for casino business activities
According to Decree No. 03, a casino is a conditional business, and can only be conducted as an ancillary business in association with the main business (e.g. regarding tourism, a hotel, a resort or a complex entertainment activity) (Project). Thus, the Casino Company must apply for 2 main licenses: (i) an investment registration certificate or investment in-principle approval pertaining to the Project (collectively, Investment Registration Certificate), and (ii) a certificate of satisfaction of conditions applicable to casino business activities (Satisfaction Certificate).
The Investment Registration Certificate is issued by the provincial People's Committee on the basis of the Prime Minister's approval. To obtain thi certificate, the Project must have a total capital investment of at least US$ 2 billion.
The Satisfaction Certificate is granted by the Ministry of Finance after: (a) the Investment Registration Certificate has been issued; and (b) the Casino Company, in addition to satisfying other technical requirements, has contributed at least 50 per cent of the total registered investment capital of the Project. That means the Casino Company is not required to fully pay the registered investment capital before operating the casino. The Satisfaction Certificate's term of validity must not exceed either: (i) a period of 20 years from the effective date of the Investment Registration Certificate; or (ii) the term of the Investment Registration Certificate. With respect to an existing and operating casino project, the Casino Company may apply for a Satisfaction Certificate with a maximum term equivalent to the remaining term of its existing Investment Registration Certificate.
Where a casino undertakes any foreign currency activities (e.g. exchanges or payments), the Casino Company must obtain a relevant license from the State Bank of Vietnam.
3. Number of electronic gaming slots and gaming tables
The quota on electronic gaming slots and gaming tables for any Project is to be decided by the Prime Minister on the basis of the total investment capital registered by the Casino Company. As such, the Casino Company may have 10 electronic gaming slots and 1 gaming table for every US$ 10 million of contributed investment capital. This principle is applied to both a newly-invested Project and an expanded Project.
According to Decree No. 03, the number of slots and tables a Casino Company may have at a specific point in time is subject to the amount of contributed investment capital. Thus, the more capital it has paid, the more electronic gaming slots and gaming tables the Casino Company may be allowed to put into operation. In addition, any increase in the number of permitted gaming slots and gaming tables for operation would require an amendment to the Satisfaction Certificate, which can only be made if the total investment capital contributed at the time of applying for the amendment is at least US$ 100 million greater than the investment capital contributed at the last issuance of the Satisfaction Certificate. While it initially appears to be the Government's attempt to boost the progress of capital injection into Vietnam, investors should now have a well-prepared plan for raising capital and funding to avoid delays in business operations.
4. Grandfathering
A Casino Company that has obtained an Investment Registration Certificate and has operated a casino before the Effective Date is not required to obtain a Satisfaction Certificate, and can continue to operate based on its existing license. In such case, the number of permitted electronic gaming slots and gaming tables of the Casino Company, as well as the location of the casino and its operations, shall be in compliance with its issued Investment Registration Certificate. If a Casino Company that has undertaking casino activities would like to increase its number of gaming slots and gaming tables, then such Casino Company may apply for a Satisfaction Certificate, provided that the newly requested amount of slots and tables does not exceed the total amount which has been approved under the Investment Registration Certificate. For a Casino Company that has obtained an Investment Registration Certificate but has not undertaken any casino activities, obtaining a Satisfaction Certificate is mandated.
5. Another new decree governing betting on horse and dog races and international football
For your information, the Government also issued Decree 06/2017/ND-CP (Decree No. 06), which will take effect from 31 March 2017 and which governs betting activities on horse and dog races and international football. A betting company, in addition to satisfying other technical requirements, must contribute a specific amount of required capital subject to the type of betting (i.e. not less than VND 1,000 billion for horse racing and international football betting, and not less than VND 300 billion for dog racing).
The betting company must also obtain a similar 'certificate of satisfaction' with regards to its betting business before it can operate. However, for betting on international football, the Government under its pilot plan will only allow one organisation to carry out this business, and this is done on the basis of a bidding process.
A bettor must be 21 years of age or older. The daily maximum value for each betting type at a betting company is VND 1 million.
For further information, please contact:
Frederick Burke, Partner, Baker McKenzie
frederick.burke@bakermckenzie.com
