Vietnam’s Gaming Industry Struggles With Regulatory Gaps and Lack of Central Oversight

Vietnam’s gaming market remains in a state of underdevelopment due to a fragile regulatory framework riddled with inconsistencies and administrative obstacles, according to legal experts speaking at G2E Asia.

Luís Mesquita de Melo, General Counsel at Hoiana Integrated Resort, described the country’s regulatory structure as “very unsophisticated and immature” during a panel on compliance issues. Highlighting the legal hurdles facing operators, he said, “Vietnam is obviously an emerging jurisdiction with all the pains of trying to find its way and balance between business interests and regulatory requirements. The current regulatory system in Vietnam is still very unsophisticated and immature.”

Mesquita de Melo pointed out that while Vietnam took a significant step in 2017 by issuing a gaming decree intended to serve as the industry’s legislative foundation, this effort was never fully realized. Essential follow-up regulations have yet to be implemented, leaving critical aspects of the industry entirely unregulated.

“Where I see the most relevant regulatory challenges is the fact that there are a couple of areas where there’s absolutely no regulations,” he said. “One of those areas is junkets, and being a foreigners-only zone because in a country like Vietnam, you have to have junkets.”

Although junket operations in Vietnam are technically designated as “international tour operators” or “travel operators,” they operate in the same fashion as those once found in Macau. Their existence within a legal vacuum places them in a precarious grey zone.

Compounding the problem is the absence of any formal guidance on gaming credit issuance, a vital element in attracting high-value foreign players.

“There are no regulations on credit either,” he noted. “If you associate these two aspects and being a foreigners-only casino where you have to bring players from outside and provide value, it creates a lot of incidents.”

Vietnam’s civil law system poses further complications. In contrast to common law jurisdictions where regulations can be more fluidly interpreted and applied, Vietnamese laws tend to remain dormant until they are clarified through administrative rulings. “This means that for everything that you want to do, there is this mindset that we have to ask the government how to do it,” Mesquita de Melo explained. “This obviously creates an additional layer of problems in the sense that you never really know how the law is going to be interpreted.”

Challenging the belief that a lack of regulation creates operational freedom, he added, “I honestly don’t believe that’s the case. From a regulatory and compliance standpoint, I believe that the more regulations and clarity you have, the better for the operators, even from a business standpoint.”

One of the most fundamental weaknesses in Vietnam’s gaming governance is the absence of a dedicated regulatory body. “One of the biggest problems we face in Vietnam is that there is not a gaming regulator, because all the gaming projects need to get approval from the prime minister,” Mesquita de Melo explained.

Instead of a centralized authority, operators must obtain greenlights from up to eight different ministries for any substantial decision. “You have the Ministry of Finance that is the most related to gaming, but then you have to go through the Ministry of Public Security, because it’s a matter of security. You have to go through the Ministry of Planning and Investment, you have to go through the Ministry of Justice. It is very difficult to get approvals on anything.”

This fragmented process often forces operators into a difficult choice. “The decision to make is to follow international standards and self-regulate your own gaming practices, which we try to do, especially because we are foreign invested,” he said. Alternatively, companies may adopt a more dangerous approach: “You don’t ask for approval, you ask for forgiveness whenever you cross the red line.”

In comparison, other jurisdictions in the region are showing more structure in their gaming policy directions. Pedro Cortés, Managing Partner at Lektou Law Firm, shared insights into how Macau has undergone sweeping reforms to align with Beijing’s national agenda.

“Macau is aligning with the policies of the central government,” Cortés said. “When we talk about the first public policy objective of Macau in Article 1 of the gaming law, you see that it’s safeguarding national security and the security of Macau. All operators and stakeholders should have that in mind.”

Using culinary metaphors to explain regional differences, Cortés likened Australia’s policy environment to “the spicy one,” noted Japan’s slow-moving integrated resort projects as “slow-cooked meat,” and referred to Macau’s system as “a Beijing kitchen.”

Despite Macau’s regulatory overhaul, Cortés warned against assuming that the VIP junket business has disappeared altogether. “Don’t think that the VIP market disappeared or that the junkets disappeared. Some former junkets are probably working in unregulated markets in Southeast Asia,” he said. “Junkets are very creative human beings.”

He acknowledged that the regulatory clampdown in Macau has made it harder for junkets to operate unchecked. “Now it’s more difficult for them to do it, and this is very good for Macau,” Cortés concluded. “You see more or less balanced markets now, but don’t think people disappeared overnight. The junkets and sub-junkets are still around in various forms.” 

By fLEXI tEAM