Australian firm bets big on Vietnam gambling market

The Ministry of Finance is compiling a new decree on international horse racing, dog racing and football betting services. The Investor talks with Michael Efron, Chairman and Director of Vietnam Sports Player Pty Ltd about his policy recommendations and the road his company has undertaken in its endeavor to obtain a betting business license in this field.

You have been seeking a company and betting license for an international horse racing and sport betting operation in Vietnam for many years. How is the progress to date, given that an adequate and complete legal framework for this area is yet to be put in place?

I attended the Vietnam's Association of Foreign Invested Enterprises (VAFIE) in both the 2020 “Betting Symposiums on the Government Draft Decrees on International Horse Racing and International Sports Betting Business Laws”.

In April 2022, I attended the forum “Fiscal Policy to Support Socio-Economic Recovery and Development Program”, which saw Minister of Finance Ho Duc Phoc as a keynote speaker and the attendance of VAFIE.

Although this forum did not concentrate on draft betting laws and the value-added stream of tax revenues collected on the upcoming 2022 FIFA World Cup, the government should now consider to fast track and award an international sports betting business license to ensure such tax revenues.

The government has allowed a Vietnamese company to run a casino service entity on Phu Quoc Island where Vietnamese residents can enter to gamble for the first time on trial basis. Should a similar pilot scheme be applied to your company in horse racing and sport betting services?

We recommend the government to approve a five-year international sports betting business license to be either under a circular (lengthy process), or via a ‘Principal Agreement’ (fast track process in time for the upcoming 2022 FIFA World Cup) and award a ‘Certificate of Enterprise Registration’.

The main advantage for the government to award such a license would be the collection of tax revenues it requires to fund post-Covid policies. It would also prevent individual and family financial stress caused by unlimited betting losses from illegal offshore betting companies that are easily accessed from their websites, as was the case during the 2018 FIFA World Cup.

The Ministry of Finance is compiling a decree to replace Decree No.06/2017/ND-CP regarding the betting business of international horse racing and international football for government submission. What are your major recommendations to this new decree draft?

The government should promulgate three separate decrees. Firstly, a decree on international horse racing and greyhound betting business. Secondly, a decree on international football and sports betting business. Thirdly, a decree on casino betting business.

First, the government drafts have proposed minimum loss limits for players that we support as a socially responsible gambling code of conduct and address problem gambling issues. Loss limits make sense as opposed to individual betting limits and are easier to regulate and administer.

Loss limits are fundamental to our responsible gambling codes of conduct to assure social order and less mental health issues for Vietnamese, expats, and foreign registered players.

The government should apply betting loss limits for registered Vietnamese and foreign players differently. We propose that registered Vietnamese players that have a minimum monthly income of VND10 million ($435) have a betting loss limit of VND1 million per day.

However, if a local Vietnamese registered player’s monthly income is VND50 million, then we propose an increased betting loss limit of VND5 million per day and be applied equally to both expats and registered foreign players, as Vietnam’s local casinos have no betting limit and/or loss limit restrictions.

As part of our gambling harm minimization, our software would allow registered players to set their own gambling limits, and their gambling frequency per day, week, or month.

Second, the government drafts have proposed an amount of money contributed to the state budget as tax payment obligations that does not apply internationally. Therefore, our proposal is an agreed formula with a percentage of gross profit (net revenue less cost of sales) to de-risk any proposed tax obligations for an investor.

Third, the government drafts have not articulated any tax rates and/or financial tax concessions for the sports betting and international horse racing businesses.

We propose the following sports betting tax rates for the initial 12 months of business operations reviewed by the government and enterprise based on company financials: 8% value added tax, 10% special consumption tax, 10% corporate income tax, 2% social responsibility tax (educational programs for problem gamblers), 2% charity tax, 0% withholding tax, and 0% capital tax transfers for offshore profit remittances.

Fourth, the government drafts have not articulated the percentage requirements allowed under a 100% or a 50% foreign owned sports betting business license, or the possibility of a joint venture agreement with an existing local company which can be foreign owned; minimum amount of five-years of knowledge and experience in a betting business; and financial capacity of $44 million.

What are the conditions for your company to finally make an actual investment in Vietnam?

The conditions include the Ministry of Finance issuing a new betting circular or decree with updated terms and conditions that are fair and equitable for both an investor and the government, whilst addressing socially responsible gambling codes of conduct for a betting business.

The new betting circular or decree for both betting businesses should include business sector codes, taxation rates, player betting loss limits for both locals, expats, and foreign registered players, and other rules and regulations, and include a regulatory body with an enterprise representative.

How will your investment look like? Will the service be online, or will you build facilities for it?

Statistically an estimated 90% of sports and horse race betting is placed online, and/or via a mobile phone application. There is also a supplementary need for betting terminals allowed in local casinos and within five-star hotels, lottery betting agents, and/or other approved outlets under a franchise agreement with the enterprise.

Betting is considered a sensitive business in Vietnam where investors are expected to be “tied” to various legal requirements. What are the pros and cons that differentiate Vietnam’s sport and horse racing betting market from its regional peers when it comes to opportunities for investors?

I agree that in Vietnam both sports, international horse racing and casino betting remain sensitive industries and should be carefully monitored by the government in collaboration with enterprises and experts involved in the betting industry in consultation with health care professionals. All parties have a vested interest to protect Vietnamese individuals and their families from gambling harm and/or addiction and be proactive in doing so.

We await a new circular or decree on betting business for international football, horse racing and greyhound racing, and once a circular or decree is promulgated by the government, then we would be happy to have a follow up interview with our updated opinions.