Although the Secretary of the Economy spoke only of a “potential review of gaming legislation in advance of the upcoming concession expirations in 2020 and 2022”, it seems inevitable a reform of the law that has been in force since 2001 (nº 16/2001) will take place.
Although it is theoretically possible, to think of a new public tender with the present law is a scenario that finds no supporters.
“The Gaming Law was approved in 2001, back when no-one could possibly anticipate the gaming industry’s exponential growth,” local lawyer Bruno Beato Ascenção told Macau Business. Without surprise, he says, “the existing legal framework does not reflect the current status quo, whether by number of operators or even by level of involvement in gaming operations.”
Another local barrister, Sérgio de Almeida Correia, gives an example of what has to be corrected: “Reality shows that there are (officially) six entities that directly exploit the existing casinos in Macau, three of which do so under sub-concession contracts which were not even foreseen by law. This situation has to be corrected because the revenue obtained by this route by the MSAR cannot justify an operation outside the law.”
But this is not the only reason according to Sérgio de Almeida Correia that requires a revision of Law 16/2001: “It is verified that there are entities that exploit casinos directly without having any licence, publicly presenting themselves as casino owners and operating under contracts with existing dealers and subcontractors.”
Interviewed by Macau Business, Mr. Correia says: “The SAR Government cannot continue to close its eyes to these cases and to all these marginal operators. If the objective is to continue they must be brought into the law” because in this context there exist “[opaque] contracts and counterparts that are unknown to the population and whose benefits to the MSAR are barely visible, unlike the fortunes that these third parties have created in the shadow of these ‘schemes’.”
Change to the law to correct problems that history has created but also to adapt legislation to the new challenges that gambling in Macau has and will continue to have.
“Due to the scarcity of land in Macau it is likely that the building of additional Integrated Resorts has come to an end and thus it is no longer necessary to grant long-term concessions,” explains Bruno Beato Ascenção. “Shorter concessions, say for the period of 5 or 10 years, allows the MSAR Government greater flexibility in adjusting the Macau gaming industry in line with its political and economic policies of the moment, and especially those set out by the Central Government.”
There is no shortage of issues that may be of interest to the government when it decides to change the law.
“The SAR Government cannot continue to close its eyes to these cases and to all these marginal operators. If the objective is to continue they must be brought into the law” (Sérgio de Almeida Correia)
Macau Polytechnic’s Professor Changbin Wang understands that “the concession system may work well in the public utility services which are characterised by natural monopolies, but it probably does not make much economic sense when it is applied to Macau’s casino gaming industry.”
And he has three reasons: first, it is the unique location of Macau rather than any monopolistic or oligopolistic status in the gaming market that has attracted investment from developers; secondly, the concession system may hinder the growth of Macau’s economy due to its anti-competitive nature; and thirdly, “under the concession system the government loses the flexibility to replace ‘a bad player’ because the government would be reluctant to conduct a public tender which is quite time and cost consuming.”
For all this, concludes Professor Changbin, “the Macau Government, in my opinion, should consider a normal licensing system without limiting the number of casino operators and the maximum period of operation.”
In a word, “in order to achieve greater leverage in negotiating power, an amendment of the Gaming Law is inevitable,” concludes Bruno B. Ascenção.
Junkets within the law
The current regulatory regime governing gaming promotion, from 2002, is facing amendments to take effect this year.
The purpose of the Gaming Inspection and Co-ordination Bureau is to tighten the activity of the junkets, with the requirement of a higher capital deposit for licensed gaming promoters registered in Macau.
The amendments that will come into force in 2018 follow those introduced in 2015.
The Association of Gaming and Entertainment Promoters, which represents the sector, proposes the creation of a central database of the credit of individual players, but it is not known if the government will take this idea into consideration.
It is necessary to focus on the junkets | Extension vs. Expiration
