By José Álvares*
Many seem to be predicting the apocalyptic end of gaming on the advent of the new law, yet it is curious to see that investors’ confidence in gaming stocks actually rose to levels not seen in the past couple of months – I dare say the operators are not excessively concerned with the changes to the law, if yet, like anything, some tweaks could be warranted (which is part of the function our lawmakers have).
In regards to the specific changes, I cannot afford to go into much detail, but will approach some of the points being discussed. A reduction of the tenure of the concessions may imply less long term investment, but on the flipside it may spur more competition, with opportunities being made available to others to bring new ideas to Macau. The number of tables / slots being capped is nothing new as that was already in place – just instead of a fixed annualised growth, it will be subject to a case-by-case analysis by our government (that I am sure would not hinder an increase when the same is justified).
Requiring operators to be able at all times to redeem all chips in circulation is reasonable given no other entity has the right to issue assets with an almost currency status and in light with what happened with deposits made with some junkets, which withdrawal was refused to the customers. Also, instead of appointing a government delegate to the operators, the government opted to put more responsibility on the directors – in that regard, I would hope there would be some limitation in case the director is not wilfully or negligently responsible (similar to our current general director liability regime).
Some claim there won’t be a return to the “normal”, referring to the heights of the gaming revenue – first, I question, shouldn’t we measure our expectations? Macau’s gaming sector (just like the society as a whole) relies on mainland China customers, but ours being a jurisdiction with free flow of capital, there were always limitations on the influx of capital that the said patrons could spend here.
Many schemes were developed to skirt currency controls and that benefited the spending in Macau in a not so proper way – one example being the UnionPay terminals located in Macau but connected to the mainland, a situation that was addressed in 2018. We frequently compare ourselves to Nevada and yet, though we have more total return, we have a percentual imbalance when compared to the said gaming mecca on the revenue deriving from gaming / other connected activities (I reckon, it’s a different market, especially in relation to the consumer).
Finally, and most importantly, the diversification angle – to be fair, it is merely putting into law a situation that was already occurring, meaning, a close cooperation between the Government and the operators to return value to society through a myriad of activities (from the top of my head, the recently held Grand Prix and the fairly new Art Macao). We all benefit from a booming economy, but no one stands to win if we don’t engage in sustainable growth, one that isn’t relying on just one sector – that doesn’t imply we need to shrink that same sector in other for others to breed, rather that we must eschew the comfort of that false sense of security to propel other sectors to compete for similar limelight.
We need to continue to leverage on the success of our tourism sector and with it (or its riches) fuel others – one thing is clear, without the support of the former, it will always be harder to succeed on the latter.
