TATIANA LAGES/LUSA

Gaming entering ‘different cycle’ aligned to China’s interests – Consultant

The consultant for Macau gambling operator Sociedade de Jogos de Macau (SJM), Rui Cunha, says that gambling in the territory is entering “a different cycle” that needs to be aligned with China’s national policy and interests.

“Macau cannot be detached from the interests and overall policy of China,” analysed Rui Cunha, a lawyer and consultant for SJM, the oldest gambling operator in the special administrative region.

Since the sector was liberalised in 2002, three concessionaires have been operating locally: SJM, Galaxy and Wynn, and three sub-concessionaires, Venetian, MGM and Melco.

Gambling accounts for about 80% of government revenues and 55.5 per cent of Macau’s Gross Domestic Product, in an industry that employs more than 80,000 people, or 17.23 per cent of the working population. In 2019, the region received almost 40 million visitors, a year when casino revenues were MOP292.4 billion.

Rui Cunha said that it was thanks to the rapid growth of the gambling sector, in the first 20 years since liberalisation, that “super-employment was created” and allowed for the building of structures that would otherwise “be difficult to have,” such as “hotels, restaurants” of an “international standard”.

“It was a cycle that has closed and now we will enter a different cycle, better or worse, but we will be in a different cycle,” the lawyer analysed, noting that “there may be a need to make some corrections” in the area of gambling and, from this perspective, one has to take “into account that Macau is part of China”.

Recognising that “it is not very possible that there will be a boom” in the sector again, Rui Cunha estimated that the territory continues to be unable to “put gambling to one side,” given the difficulty in diversifying the economy.

“This is not going to be possible any time soon and forcing it may bring some upheaval in the social fabric itself,” he said.

The consultant particularly referred to the impact that a crisis could have among younger people, “who entered the job market” with the liberalisation of the sector, and who “are the most vulnerable,” because they entered “in a phase of euphoria, they got used to a certain level, which if it is now reduced will bring shocks and, in an extreme situation, greater unemployment,” he analysed.

The end of the 20-year gaming concession period in June 2022, and the consequent special extension of licenses until the end of this year, coincides with the production of new legislation to regulate, under tougher rules, the activity of industry players.

The amendment to the gambling law, under consideration by parliament, provides for the granting of licences for a maximum period of 10 years, instead of the 20 previously foreseen. The proposal also determines a maximum total of six concessionaires, prohibiting sub-concessions.

Reproducing what has been reiterated by the Macau authorities, Cunha said that the legislative boost was part of “an attempt to create a healthy environment,” in which casino activity “can develop without problems”.

“Perhaps it was time to stabilise, to consolidate what has been done over the last 20 years,” he said.

In terms of reducing the licence period to 10 years, the specialist does not believe that “it represents a major step back” or that it will prevent operators from applying for a concession, although everything depends on “the conditions for exercising their activity”.

As for new potential interested parties, Cunha made a suggestion: “Entry [into the market] could be through an association with one of the local operators”.

In the proposed revision of the gambling law, the government also wants to have the power to cancel concessions if they constitute a threat to national security.

Rui Cunha exemplified that “the financing of terrorism” by an operator could constitute a crime against the security of the state, stressing, however, that the decision to annul a licence “would never happen by mere arbitrariness”.

“Any abuse, let’s call it that, by a government, entity would bring very big consequences. We see the example of what is now happening in the war in Ukraine as to Russia, we live in a global world, where every attitude will have its consequences,” he concluded.