Vietnam’s gaming regulatory system is still “very unsophisticated and immature”, with significant loopholes creating challenges for operators, according to a legal expert speaking at G2E Asia.
Luís Mesquita de Melo, General Counsel at Hoiana Integrated Resort, highlighted the considerable regulatory gaps in Vietnam’s gaming industry during a panel discussion titled “The Latest Compliance Issues Faced by Gaming Operators.”
“Vietnam is obviously an emerging jurisdiction with all the pains of trying to find its way and balance between business interests and regulatory requirements,” Mesquita de Melo said. “The current regulatory system in Vietnam is still very unsophisticated and immature.”
Mesquita de Melo pointed out that while Vietnam introduced a gaming decree in early 2017 as the main legislative framework, it was never completed with necessary follow-up regulations. This has left significant areas completely unregulated, including junket operations and credit issuance.
“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 explained. “One of those areas is junkets, and being a foreigners-only zone because in a country like Vietnam, you have to have junkets.”
In Vietnam, junkets are officially known as “international tour operators” or “travel operators,” but they function essentially the same as junkets in other markets, particularly from Macau. The lack of regulations places junket operations in a legal gray area.
“There are no regulations on credit either. 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,” Mesquita de Melo added.
Another major obstacle is Vietnam’s unique regulatory approach. As a civil law system, laws in Vietnam are not truly applied until they become the subject of an administrative decision. “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,” he said. “This obviously creates an additional layer of problems in the sense that you never really know how the law is going to be interpreted.”
Mesquita de Melo emphasized his belief that the lack of clear legislation is not beneficial for operators, contrary to the view that fewer regulations provide more flexibility. “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.”
Vietnam lacks unified gaming regulator, creating approval challenges
A key issue hampering the development of Vietnam’s gaming industry is the absence of a dedicated gaming regulator, according to the expert.
“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,” he said.
This structure means that operators must navigate approvals from approximately eight different ministries for any significant 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.”
Given these challenges, operators are often forced to choose between self-regulation based on international standards or taking risks. “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,” Mesquita de Melo explained. Alternatively, companies might adopt the approach of “you don’t ask for approval, you ask for forgiveness whenever you cross the red line.”
Macau adapting to Beijing’s policy direction
In contrast to Vietnam’s regulatory challenges, Macau’s gaming industry has undergone significant reforms aligned with Beijing’s policy objectives, according to Pedro Cortés, Managing Partner at Lektou Law Firm.
“Macau is aligning with the policies of the central government,” Cortés explained during the panel at G2E Asia. “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.”
Cortés compared regional gaming policies to different cooking styles, describing Australia as “the spicy one” for trying to reshape its market, while characterizing Japan’s integrated resort development as “slow-cooked meat” due to ongoing delays. For Macau, he suggested the apt comparison would be a “Beijing kitchen.”
“Despite effectively going through reform in recent years, with the latest gaming law enacted last year, Macau is aligning with the policies of the central government,” he noted.
While acknowledging the transformation of Macau’s market following regulatory reforms, Cortés cautioned against assuming complete industry reorganization. “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, adding that “junkets are very creative human beings” who previously found ways to circumvent regulations.
“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.”
