Special Report – Ok with CSR, but how?

Even before details of the next tender are known, it’s understood Corporate Social Responsibility will play a bolder role. It remains to be seen how.

MB June 2021 Special Report | Gaming: The road to June 26, 2022

Although the current Government – in this as in other aspects of the future tender – has said nothing on the subject, the truth is that there is a consensus on the need to prioritise Corporate Social Responsibility (CSR).

“I believe it is the right and correct path, and the only one that really makes sense. No one expects the Macau government to require massive investments from the current casino operators. No land is available, and it is beyond expectation to see casino operators imploding a property to build a new one,” gaming law expert António Lobo Vilela told Macau Business.

It all started in August 2018, when the previous Chief Executive stated that “in principle, we agree that these conditions [indicators of liability for gambling companies, a reinforcement of the sanctions mechanism and the introduction of the deposit system] are reflected in future contracts because, within social responsibilities, we are very concerned with the participation of concessionaires in the areas of education, charity and traffic.” A year later, as a candidate to succeed Chui Sai On, Ho Iat Seng stated that he had talked with the gaming industry in Macau in the hope of encouraging the sector to take more corporate social responsibility.

The pandemic situation experienced in Macau, and the difficulties the Government faced finding hotels where it could accommodate thousands of people under quarantine and almost 1,500 in isolation, led Ho Iat Seng to warn operators: “This is also a challenge for you.” Concessionaires “have to see how they should assume social responsibility. This has to be clear, [social responsibility] is not just about advertising,” the Chief Executive said.

“This pandemic has societies facing new problems. Solidarity, commitment, participation are concepts that have acquired new meanings and new substance,” Macau Business hears from Sofia Pinto Ribeiro, the author of a master’s thesis titled Betting on Corporate Citizenship (2019) aimed at thinking about the future of current (sub)concession contracts and future concession contracts from the perspective of CSR.

The former Macau resident believes “this is a crucial opportunity to undertake a comprehensive system assessment, to evaluate the way concessionaires should be engaged with the city – in its broadest sense. Concessionaires are private companies aiming to maximise profit. It is not unreasonable to shape a model in which their obligations, in certain scenarios, are clearly defined.”

Assuming there is such a consensus on the importance of prioritising the social contribution of concessionaires, the question is how to achieve it.

Jorge Costa Oliveira, leader of the 2001 contest, recalls that “this discussion dates to the first tender, in that many decision-makers feel the concessionaires contribute less than they should back to the community in general. That is why the initial casino gaming special tax rate had to be raised in 2001.”

But Mr Oliveira, now Partner & CEO of JCO Consultancy, believes “making CSR an adjudication criterion for the next tender raises the problem of how to measure this contribution. Obviously, everyone will commit 200 per cent to it, but as a criterion you would have to assess it not as a commitment but based on past track record.”

[SJM has been paying a percentage point less in its GGR tax since 2002 because of its commitment to dredge the harbour.]

Believing “the current model had its time but nowadays is, in my opinion, sold out” and that “the new tender is a golden opportunity to try out new formulas and to get the concessionaires involved with the city in which they operate,” Sofia Pinto Ribeiro states, “I do believe this is a crucial opportunity to think about the way the concession model can be used to promote a better city. How? By reassessing the casino operators’ obligations beyond their financial ones. The industry can be called upon to have an important role in the city’s development.”

To that end, Ms Ribeiro proposes the creation of a foundation to bring all the concessionaires together. “The foundation I’ve imagined – an admittedly ambitious idea, but feasible – could/would be financed by the same money that concessionaires are already obliged to deliver,” she explains.

The former legal advisor to the Office of the Rector of the University of Macau explains, “This foundation would be an ambitious think tank. It would be highly specialised, fully orientated to studying and thinking about the city in its various dimensions and aspects and in an integrated way. The Government, which would have a seat on the board of trustees, would be nurtured with highly specialised and integrated information, which could empower good public policies.”

“The foundation I’ve imagined – an admittedly ambitious idea, but feasible – could/would be financed by the same money that concessionaires are already obliged to deliver” – Sofia Pinto Ribeiro

But isn’t this an overly bureaucratic solution, in a land where everything takes a long time to materialise? “It all depends on the ability to produce an articulated, well thought out normative system. I believe that we can always profit from comparative experiences, and indeed it is possible to be inspired by several experiences from around the world in order to create the best options,” Ms Ribeiro, who has lived in Portugal for the past two years, answers.

Lawyer Pedro Cortés also proposes a solution to the doubt raised by Jorge Costa Oliveira.

The local gambling barrister recently published a paper titled Macau Gaming Industry 8.0 – Public Policy Beyond 2022, in which he advocates the creation of an investment fund with which concessionaires help build up infrastructures that are lacking in the territory.

Cortés believes that the idea of the investment fund is just a tool, not least because there are several legal ways to go about it. The important thing is to move from words to actions: “The government should put a public education plan in place, where it will work directly with gaming operators to anticipate what job types and economic sectors are likely to be created in the ensuing five years, which might provide fresh opportunities and new positions for Macau residents.”

Mr Lobo Vilela believes “the tremendous economic success caused by the gaming industry in the last 20 years was not accompanied by the development of infrastructures needed to sustain such growth. Macau is in need of several infrastructures such as kindergartens, schools, hospitals and roads. It also needs, for instance, to expand the airport, or begin work on the Macau line of the light rail (linking the Border Gate directly to Cotai). All this is needed precisely because the casino operators exist and operate.” So, in the absence of massive investments being required, “it seems more than natural that casino operators would be called upon to participate in these efforts.”

Lobo and Cortés also advocate proposals for investment in the Guangdong–Hong Kong–Macau Greater Bay Area (GBA) via the “creation of an international world-class tourism destination” – “recognising the uniqueness of the cultural and social resources of Macau,” the authors said.

“With tremendous financial resources at its disposal, including revenues six times those of Las Vegas, the Macau government has a rare opportunity to position itself as a global leader in CSR practice,” Professor Jason Buhi writes in Corporate Social Responsibility, Casino Capitalism, and the Constitution of Macau (2020).

“Nonetheless, systemic challenges such as low levels of public education and political development, the influence of mafia gangs and high levels of human trafficking, problem gambling and drug use persist,” Professor Buhi of Barry University (Florida) continues. The author, with a PhD from the University of Hong Kong, concludes, “Although Macau’s situs as a Special Administrative Region of the People’s Republic of China ensures that CSR here will take its own form, these issues could be better addressed with open acknowledgement of the problems and improved channelling of local resources.”

[In the Policy Address for 2021, Ho Iat Seng announced that the Government intended to organise, in conjunction with the gaming concessionaires, a total of 12 large-scale sporting events. The pandemic did postpone the realisation of the idea, but the Chief Executive also said that “the concessionaires have given a satisfactory and positive response.” It remains to be seen who pays for what and in what proportion or how the events are chosen.]

Responsible gaming

“Problematic gambling is still a matter scarcely discussed in Macau. Though strong improvements enacted by the local regulator can be recognised, there is still significant room for improvement, and the correct timing to start implementing some new measures could be in 2022, when the current concessions are supposed to meet their term,” lawyer Óscar Madureira says.

“Matters involving the implementation of betting and credit limits, restriction of access to the casino floor for excluded patrons, problematic gambling tracking, and extension of existing gaming limitations on concessionaires’ employees should be carefully considered by the Macau regulator and legislators,” the lawyer believes.

“A responsible gaming legal framework is not excluded from such development and is definitely one of the key topics to be reviewed in order to prepare Macau for the new era of its gaming industry,” he states in an opinion article published this year by Macau News Agency.

Previous | The imbroglio that will delay reversion