Tweaking it

Officials will soon present a proposal for the revision of the Gaming Industry Regulatory Framework law (Law 16/2001), but don’t get excited. The not so lofty goal is to increase the minimum age for entering casinos from 18 to 21. There will be other changes, but only on casino access. A draft law revision has already been put together by the Gaming Inspection and Coordination Bureau’s (DICJ) legal advisors and is now being analysed by other government bodies before being sent to the Executive Council. Then the Legislative Assembly will have a look. There is no expected timeline for its final approval. According to sources, the government first tried to introduce the changes using a by-law, which doesn’t need to be approved by lawmakers. However, their legal experts advised against this. Law 16/2001, enacted in September 2001, is the main piece of legislation governing casino activities in the territory – it is commonly known as the Gaming Law. Access blocked According to the DICJ’s director, Manuel Joaquim das Neves, the proposed law revision will only cover casino access restrictions. One of the main changes proposed is the increase of the minimum age for entering casinos from 18 to 21. This was a pledge made by the previous government and reiterated by the current Chief Executive, Fernando Chui Sai On. The revision will also cover issues like the preventive interdiction of players entering casinos – a topic already mentioned in the Gaming Law but which has raised doubts among legal experts – and the existence of lists of excluded/self-excluded players, Neves told Macau Business. The DICJ’s director explained there will be an adaptation period in order not to affect the employment rights of croupiers currently under 21. It will also be possible for fire fighters, police officers and health care staff to go inside casinos in emergency situations. What if? The draft law revision will even cover what happens if someone under 21 plays in a casino and wins. This comes after a 16-year old girl entered a casino during the Lunar New Year of 2007, and won a slot-machine jackpot of HK$740,000. Although the Gaming Law states clearly that minors cannot access gaming venues, there was heated discussion on whether those under 18 could still play and win money, even if they were in the casino illegally. Eventually, the DICJ decided that the jackpot should be given to the minor’s mother, who was with the girl when she won the prize. The age proposal is an attempt to give youngsters more time to get an education before they go to or work in a casino. Some analysts, including the former Legislative Assembly president Susana Chou, have criticised the move, noting that people reach the legal adult age in Macau at 18 years of age, being considered able from then onwards to drive a car or cast a vote. The previous government had tried to lower the age of criminal responsibility to 14 for several crimes. However, the move was eventually blocked by opposition in the Legislative Assembly, with the government finally dropping the proposal. Meanwhile, the government has not given any estimates on the possible impact on gaming revenues from the under 21 rule. No tax changes For casino operators, the Gaming Law revision is a lost opportunity to push forward a break in gaming taxes. At present, casinos need to pay a direct tax of 35 percent on gross gaming revenues. The law also states they are obliged to pay a further two contributions of up to 2 percent for “cultural, social, economic, educative, scientific, academic or philanthropic actions” through the Macau Foundation and up to 3 percent for “urban development, tourism promotion and social security.” The maximum tax is therefore 40 percent, although it is currently set at 39. Now, gaming operators pay 1.6 percent to the Macau Foundation and 2.4 percent for “urban development, tourism promotion and social security” (1.4 percent in SJM’s case, which, in exchange, is responsible for dredging and other maritime obligations). Several gaming operators have been asking the government to consider a partial rebate in gaming taxes, to enhance competitiveness as well as to curb regional competition, namely from Singapore. For Luis Pessanha, legal adviser of the Legislative Assembly, the gaming tax burden in Macau is “comparatively high”. However, this is still not the appropriate moment to reduce it, because casino revenues are still booming, suggesting the market is healthy. According to Pessanha, it is also too early to assess Singapore’s impact on Macau’s gaming market and the eventual need for tax adjustments. What about the rest? Gaming operators are concerned about several issues included in the Gaming Law which have been waiting for further regulation for years. According to government sources contacted by Macau Business, there are draft pieces of legislation prepared covering most of these topics, but “there is no political will to enact them”. One of the issues is casino reversions to the territory when a gaming concession lapses. Casino reversions aim to allow the government, by itself or through third parties, to carry on exploring such a vital activity for the local economy, even if the concessionaire quits or becomes unable to continue carrying on normal operations. However, how these reversions are to take place is still to be regulated. The Gaming Law also states that a gaming concession can be unilaterally terminated by the Government by invoking public interest. In such a situation, the casino operator has the right to “just compensation”, but there are no rules on how to set it. A simpler but even more important issue is the definition of the characteristics, limits and functioning of gaming areas. Currently, the Gaming Law only states that casinos are the places “authorised and classified as so” by the Government. There is no further regulation on this matter. According to the Gaming Law, the Chief Executive also has the power to authorise the exploration of casino boats or casino airplanes, and the introduction of slot-machines at the international departure area at the Macau airport. Again, no further regulation exists on these topics. Finally, legal experts say the Gaming Law needs urgent revision on the information requirements for shareholder changes. The law states that the sale of casino operators’ shares must be authorised by the government. The main issue is that most of the gaming operators in Macau – MGM Grand Paradise is the exception – are fully-owned subsidiaries of listed companies. This means that, if the parent company changes hands, the control of the gaming operator is affected, although it is still technically owned by the same shareholders. A possible solution could be copied from other jurisdictions, where concessionaries are only obliged to communicate changes in shareholding composition that may, directly or indirectly, significantly affect operations. But again, there is the need for political will.