Changes to Vietnam’s electronic gaming machine regulations have forced Asian gaming solutions provider Success Dragon to rethink deals with two of the country’s luxury hotels.
On Wednesday, the Hong Kong-listed Success Dragon alerted investors that it had terminated its deal to provide Da Nang’s One Opera Hotel with electronic gaming machines (EGM). Success Dragon said it is “discussing and negotiating on a new approach” regarding a similar deal with Le Méridien Saigon hotel in Ho Chi Minh City.
Success Dragon said the deals came undone after both hotels “encountered unexpected difficulties in obtaining the requisite business certificates for operation of EGM business.” Success Dragon said “certain attempts” have been made to obtain the certificates but it expects the certificates are “unlikely to be obtained in the foreseeable future.”
Success Dragon further warned that there had been “a core change of Vietnamese laws in respect to EGM introduced by end of 2016” that contributed to the company’s current problems.
The core change came on December 30 via government Decree 175/2016/ND-CP, which imposed new restrictions on EGM use, including a requirement that all EGM offer a payout percentage of at least 90%. The percentage must be stipulated upfront so customers are aware of their odds.
The payout minimum must be included in the software installed by the EGM manufacturer and be certified by independent agencies operating in G7 countries. Operators are allowed to perform maintenance and repairs on their EGM but are prohibited from altering the software to set the percentage below 90%. Any alterations to the software will require recertification. The decree also required all EGM to be “100% new.”
Success Dragon insisted that its Vietnam woes would have “no material adverse impact” on its business operation and financial position, and the company promised to update investors in case of any further material developments. Success Dragon manages EGM for a number of Macau casinos, including the Pharoah’s Palace, Casino Casa Real and Casino Grandview.
Vietnam’s EGM are primarily located in the country’s luxury hotels and are only accessible by international passport holders. The government recently postponed a plan to install EGM at international airports until after the conclusion of its planned three-year trial of allowing local residents to gamble at two in-development casinos.
Earlier this month, Success Dragon announced that company secretary Wong Yuk had resigned effective January 5 to pursue other career opportunities. Wong’s role has been assumed by Cheung Pui Ki Gloria, the company’s current CFO.
