SINGAPORE — Vending machines offering "mystery prizes" which have proven to be a hit among customers are being pulled out of shopping malls across the island after the police outlawed them.

On Thursday (Aug 16), the police issued a public advisory against these machines, which dispense random prizes upon receipt of cash payments starting from S$5. In some cases, the merchants often claim that prizes such as a smartphone or a Kate Spade handbag can be won.

"Operating such machines is a form of public lottery, and it is an offence under Section 5(a) of the Common Gaming Houses Act," said the police.

Those found guilty of operating such machines face a prison term of up to five years, and can also be fined between S$20,000 and S$200,000.

The police said there are at least four merchants operating these vending machines in public areas, and that they have advised the existing merchants to cease operations. They stressed that enforcement action will be taken against those who continue to contravene the law.

Among the merchants who have stopped operations was Ms Rebecca Chan, the founder of Heybox, which has more than 15 machines islandwide at malls such as Bugis Junction, Nex and Bukit Panjang Plaza.

Ms Chan told TODAY she has "closed" all Heybox machines after being notified by the police on Tuesday.

"We understand that it's not the problem of the vending machine per se, but the way the goods are sold. However, we have been operating for almost six months and the notice was very sudden," said the 28-year-old, who runs Heybox with two other partners.

"It is a very popular game in Taiwan and China; we saw the trend there and we wanted to see if it would do well here," said Ms Chan, who also runs a Facebook live auctioning site.

Though she revealed that they had spent more than S$10,000 in procuring goods to stock the machines, she declined to disclose the revenue received, claiming that figures were hard to keep track of.

The "sudden closure" however meant "huge losses" for the business because they had rental agreements with the malls which they could not get out of, said Ms Chan.

Heybox was not the only operator to have ceased operations by Thursday. When TODAY conducted checks on the Takara Box at Liang Court, all three machines were emptied of their contents, with a sticker notifying customers that "a brand new concept" will be unveiled soon.

Announcing the change on its Facebook page on Wednesday night, Takara Box wrote: "We are undergoing an upgrading of service. We will be coming back soon with a new concept." 

Responding to queries from TODAY, a spokesperson for AsiaMalls – which manages Liang Court – said they are working with Takara Box to make arrangements to ensure no laws are contravened and “will continue to work with the relevant authorities as required”.

Customers who tried their luck with these machines were ambivalent about their closure. A 24-year-old customer who gave her name only as Chloe tried out a Takara Box at Bishan's Junction 8 in May, winning a keychain and Bluetooth headset after two attempts.

"I guess I was excited to try my luck and see what I could win. (There were) a few photos of people who won big prizes such as a PlayStation and iPhones. So of course, it's tempting to try your luck. If you never try, you never know," said the nursing student, who is currently pursuing her studies overseas.

Though she was not too upset by the police outlawing the machines, she wondered why some luck games or toy machine games — which are similar in concept to these vending machines — are allowed at arcades.

Shopkeepers at the malls where the vending machines are located told TODAY that while the machines were "very popular" a few months ago, the buzz has since subsided.

"About three, four months ago, people would crowd around (the vending machines) and leave with five, ten boxes of products. The vending machine would be replenished three times a day," said Ms Elaine Tan, 22, a shopkeeper who tends a store at Liang Court adjacent to a Takara Box machine.

But nowadays, she sees people stopping by and trying to guess the prizes, but few are willing to pay to play.