CURRENT LEGAL FRAMEWORK IN VIETNAM
Vietnam’s legal framework surrounding gambling is notably restrictive, presenting both challenges and opportunities for foreign operators. For Vietnamese citizens, gambling is largely prohibited, with exceptions including state-run lotteries and a limited number of licensed casinos. In general, licensed casinos are subject to strict government oversight, including regulations on the eligibility of players (for Vietnamese citizens, this involves criteria such as age, income, and criminal history). Additionally, these casinos are closely monitored by tax authorities and are subject to foreign exchange controls. Only one operating casino has been permitted on a (limited term) pilot basis to allow Vietnamese customers to gamble. The forms of gambling include casinos, lotteries, betting on horse and greyhound racing, betting on international soccer matches, electronic games with prizes, and online electronic games.
Vietnam makes no attempt to regulate gaming activities that are provided outside of Vietnam. There are no clear provisions in Vietnamese law that address the legality of citizens engaging with foreign-based online gambling platforms, leaving a significant legal gray area. Vietnamese law only allows for and regulates gaming activities in Vietnam.
Despite the illegality of online gambling within Vietnam, many Vietnamese gamblers continue to access offshore gambling sites without facing legal consequences, often using VPNs or other methods to bypass government restrictions. This arises from the lack of jurisdiction Vietnamese law has over international operators. However, one of the key provisions of the newly passed Decree 147/2024/ND-CP is the prohibition on licensing casino-style games and games featuring card imagery, aimed at reducing harmful effects on players and preventing the negative social consequences associated with such games. These updates reflect the government’s ongoing efforts to refine the online gaming landscape in Vietnam.
Future Directions and Regulatory Considerations
Vietnam’s gambling laws are in the process of being reformed. The government has considered regulating international betting services, particularly in the realm of sports betting. While these efforts are still in the early stages, they suggest a move toward greater regulation of online gambling, both domestically and internationally.
One key development is Decree 23/2024/ND-CP, which mandates a bidding process for companies interested in offering international football betting. However, attracting investors to the domestic market remains challenging due to stringent requirements and unclear regulations. The Vietnamese government needs to establish a clear legal framework for online gambling to address these issues and ensure that local operators can safely and profitably engage in the market.
Decree 147/2024/ND-CP is also significant as it outlines a ban on casino-style and card-based mobile app games. These games are now ineligible for licensing, a move that the authorities hope will help minimize the potential harmful effects of such content on players, particularly the younger demographic.
For Australian operators, understanding the legal nuances in Vietnam is essential. As Vietnam considers regulatory changes, there may be opportunities for Australian operators to enter the market if they comply with local laws and offer a safer, more regulated environment for Vietnamese gamblers.
POTENTIAL ISSUES FOR AUSTRALIAN GAMBLING CORPORATIONS IN VIETNAM
Marketing and Promotional Services
Within Vietnam: The Vietnamese legal framework significantly restricts marketing and promotional activities related to gambling. Any marketing effort must comply with local laws, which currently prohibit most forms of gambling for Vietnamese citizens. This creates challenges in effectively promoting services without violating regulations.
Foreign corporations should conduct a thorough review of all marketing materials and strategies to ensure compliance with local regulations. It would be important to navigate the complexities of advertising laws and to develop compliant marketing strategies that do not inadvertently promote illegal activities.
Offshore/Online: Engaging with Vietnamese citizens through offshore platforms presents a legal gray area, as current laws do not explicitly address the legality of foreign online gambling services. This ambiguity could lead to potential legal repercussions for operators if the government decides to enforce stricter regulations against foreign platforms. Companies must ensure that their online presence does not inadvertently promote illegal activities within Vietnam.
Gaming Related Financial Issues
Outward Remittance, Settling Debts: The Vietnamese government imposes strict controls on foreign currency transactions, complicating the outward remittance of winnings or payments to offshore entities. This could hinder the ability of Australian operators to settle debts or remit profits back to their home country.
Under the Ordinance on Foreign Exchange, residents of Vietnam are only allowed to remit money overseas via bank transfer for specific and authorized purposes. Offshore remittances for gambling are not explicitly listed as a permitted purpose, nor is it allowed under other laws. This means that residents of Vietnam are prohibited from remitting funds abroad for gambling debts or to pay for gaming services.
Australian operators should develop a comprehensive financial strategy that includes understanding local banking regulations and exploring partnerships with local financial institutions. They should also consider establishing a local subsidiary that can manage financial transactions within Vietnam’s regulatory framework, thereby facilitating smoother remittance processes.
Debt Collection and Enforcement: Collecting debts from Vietnamese players may pose significant challenges due to the lack of legal recourse available for foreign operators in Vietnam. Without a clear legal framework, enforcing payment obligations could lead to financial losses for Australian companies.
Australian corporations should establish clear terms and conditions regarding payment obligations on their internal platforms, ensuring users are fully aware of their responsibilities. However, since third-party debt collection services are prohibited in Vietnam, corporations cannot engage external agencies to recover gaming debts. If legal action becomes necessary, the only viable option is to hire a local law firm to represent the corporation in court.
Travel Arrangements
Arranging Travel Abroad for Vietnamese Gamblers: Engaging in activities that appear to promote or facilitate gambling abroad could attract scrutiny from Vietnamese authorities, potentially leading to investigations or regulatory actions against both the operators and their clients.
However, there is no specific legislation preventing corporations from arranging travel for Vietnamese players. Even so, any advances made for Vietnamese gamblers’ overseas travel may be considered the provision of offshore credits or could necessitate opening a bank account in Vietnam. Since offshore loans related to gaming or gambling are not allowed for business purposes, such advances would be prohibited. If a premium player or junket operator in Vietnam uses funds from an offshore bank account to repay an offshore loan, this transaction would not fall under Vietnamese law but would instead be governed by the regulations of the jurisdiction where the offshore account is located.
Additional Considerations
As Australian gambling corporations explore opportunities to provide services to Vietnamese customers on a cross-border basis, they must be aware of various legal and regulatory aspects that will apply to their operations.
Cybersecurity and Internet Services
Despite the market’s growth, Vietnam has been actively combating illegal gambling, with measures to shut down unlicensed gambling apps and social media pages. With the introduction of Decree 147/2024/ND-CP, there are heightened requirements for cybersecurity measures that online gambling services must adhere to. This decree mandates that any online service provider, including gambling platforms, implement robust cybersecurity protocols to protect user data and ensure the integrity of their operations. Failure to comply with these regulations could result in significant penalties or restrictions on the ability to operate within Vietnam.
One key regulation prohibits the licensing of casino-style games and games using card imagery, a measure aimed at minimizing potential harm to players. Also, children younger than 18 are limited to one game session of no more than 60 minutes per day and a daily maximum of 180 minutes. This appears to be a protectionist mechanism imposed on children to prevent addictive personalities and normalization of casino-style games with flashing lights and sounds. However, enforcement is another issue.
The government’s ongoing efforts to regulate online gambling could lead to tighter restrictions, and Australian operators will need to be alert to the evolving regulations to ensure compliance.
Personal Data Protection
If Australian gambling websites collect personal data from Vietnamese customers, they will be subject to Vietnam’s regulations on personal data protection. These regulations require companies to obtain explicit consent from users before collecting or processing their personal information. Operators must ensure that their data collection practices comply with local laws, which may involve revising privacy policies and implementing user consent mechanisms. Non-compliance could lead to legal action and damage to reputation.
Further, special attention must be paid to how personal data is stored and transferred across borders. Compliance with both Vietnamese law and international data protection standards is crucial for mitigating risks associated with data breaches or unauthorized access. However, Australian companies are accustomed to stringent compliance requirements under the Privacy Act. If they adhere to these standards, they could meet or exceed the new Vietnamese regulations concerning personal data protection.
CONCLUSION
In conclusion, while significant opportunities exist for Australian gambling corporations within Vietnam’s evolving market landscape, navigating the complex regulatory environment requires careful planning and compliance. Australian operators should engage local legal experts and continuously monitor regulatory changes to ensure successful market entry.
Gabriel Tambakis
