Pandemic has not generated more political will towards allowing online gaming – Analysts

Gaming experts diverge on whether the Covid-19 pandemic will lead to a shift in the general attitude shown by local and mainland authorities towards allowing online gaming in Macau.

MBtv in partnership with the Rui Cunha Foundation today (Thursday) organised its ‘Macau gaming: A reality check’ debate, bringing together former Macau SAR gaming commissioner, Jorge Oliveira, the Managing Partner at IGamiX Management & Consulting, Ben Lee, and the founder of Newpage Consulting, David Green.

According to consultant David Green, the Covid-19 pandemic has led to a paradigm shift to the gambling business model, in which online operations and payment methods have grown in importance and will become dominant in the next years.

“We can’t assume that the conduct of gaming operations in casinos after Covid-19 is going to be the same going forward as it has been up to today. First, there is a real push to go cashless, people don’t want to be handling money due to public health concerns,” Green expressed.

Newpage Consulting founder David Green

“Secondly, social distancing in casinos is going to work very much against the whole dynamic of Chinese gaming, which is ‘stack them in’ and get them around the tables where the excitement is. Get them back betting and really amp the volume of play. I don’t subscribe to the view that this can just continue as though nothing happened.”

Oliveira – who was involved in developing the original local gaming legislation enforced in 2001 – has long been a proponent of diversifying gaming offerings from casino to online but he does not see this happening soon in the SAR, mainly due to political reasons.

“One of the problems in Macau, and I have tried several times to have decision making on liberalising the kinds of gaming, and there was never political agreement from the powers to be […] In my opinion we will not have any decision and it’s pointless to debate it,” Oliveria stated.

The former government consultant remembered that even during the tenure of Chief Executive Edmund Ho, there were some intentions to open up the market to online gaming that were put aside for political considerations.

“At that time the Chief Executive had lost significant power due to the corruption case of Secretary Ao Man Long. The issue is that he did not want to risk a negative directive from Beijing and he could not risk having a very complicated discussion in the Legislative Assembly which he was not sure would go the way he wanted,” Oliveria noted.

In 2008 former Secretary for Transport and Public Works Ao Man Long was found guilty on 40 counts of bribe-taking, abuse of power and other crimes, and sentenced to 27 years in prison, later increased to 29 years.

“[Edmund Ho] had always been a strong supporter of liberalisation of online gaming and the potential Macau had as a centre for online gaming. Today the situation has changed completely, the position the Chinese government took, vis-a-vis neighbouring countries, does not allow a lot of leeway to be more understanding to Macau operators targeting Chinese punters,” he added.

Former Macau SAR gaming commissioner Jorge Oliveira

Chinese central authorities have taken several steps to clamp down on online gaming operations targeting Chinese nationals, pressuring Philippines authorities to put down similar businesses and expelling several Chinese nationals from Cambodia for their involvement in this business model.

Last month the Chinese Ministry of Culture and Tourism also revealed that it plans to restrict mainlanders’ travel to some overseas cities to be included in a cross-border gambling ‘blacklist’.

However, Oliveira considered there is a case to be built for local online gaming skills to be developed and created to target other markets, with operators that would integrate with the new means of payment in the mainland and other Asian countries.

“That is something that might be considered but it has to be very well done, very well prepared and it would be necessary for the Macau government to have generated in the last decade critical mass and people able to reason strategically and, in my opinion, it has not done this,” he added.

The gaming legal expert admitted that the pandemic could indeed lead gaming operators to be more willing to admit different kinds of online payments

Meanwhile, Ben Lee expressed that according to his experience the type of clients online gaming operations reported in neighbouring Southeast Asian countries have “very little intersection” to the clients targetted by land casino operations.

The gaming expert noted that it is necessary to separate pure online gaming and proxy betting, in which a punter, maybe in Mainland China, will communicate a bet through a proxy sitting at a table in another location, and that represented a large percentage of junket revenue in these Southeast Asian locations.

“I’ve seen those online centres myself in the Philippines and Cambodia. The online industry is targetted primarily at the really grind mass market. The bottom man of the market in China, the ones that can’t afford to travel or don’t travel at all,” the gaming consultant expressed.

Managing Partner at IGamiX Management & Consulting, Ben Lee

“To target these people online operators hire armies of youths early in their 20s who are constantly on their WeChat posing as potential players, trying to entice people to come in and play, give them credit and get them hooked on gambling. They are not the people who would travel out of China to gamble in land-based casinos.”

Lee noted that at one point revenue from online gaming generated in Sihanoukville, Cambodia was estimated at US$5 billion to US$6 billion, with the online gaming market in the Philippines at one point estimated at US$25 billion.

However, he considered that the boom in the online industry reported in these countries was mainly due to local authorities authorising these operations and not necessarily a growing increase in demand for online gaming.