Macau public backs gaming industry with support for six concessions

The consultation opened in September 2021 to consider changes to Law No. 16/2001 – “The Legal System for Casino Gaming Operations”.

In total, 1,340 responses were received, mostly from individual citizens.

The issue that attracted the most responses was the number of concessions that the Macau government would issue in future tender processes. In total, 217 responses were provided to this issue.

Of these responses, 22 indicated they wished to see no more than six concessions issued. A further 95 said they would prefer exactly six concessions, while 36 supported there being more than six concessions. The remaining responses did not have a clear preference.

Although the previous bidding process allowed for only three concessions, it also allowed for winning bidders to issue sub-concessions to their own licence, a concept the government proposed removing in the consultation. The report noted that removing sub-concessions was a popular idea with respondents.

“A large number of bids hinders the diversified development of the industry and may lead to unhealthy competition in the gaming market and increase the difficulty and administrative cost of the government’s supervision of the industry,” the Macau government said.

“If the number of grants is too small, it will weaken Macau’s international competitiveness.”

The second most popular issue for responses was that of the length of time for concessions. Here, 72 respondents, around half of those who expressed a preference, wished to see the length a concession lasts cut down from the previous 20-year term. Meanwhile, 56 said the length should stay at 20 years and 17 said they should be longer.

“Opinions pointed out that the excessively long grant period lacks flexibility and also makes gaming companies inert and lose market competitiveness in the long run,” the report said.

Most respondents who wished for a shorter length recommended a 10-year term, with an option for extension to 15 under special circumstances.

Of the proposals in the original consultation, among most notable was a suggestion that government representatives should sit on the boards of operators permitted to open casinos in Macau.

“The power of supervision allows the government to have greater supervisory power in the daily work of gaming companies and directly monitor the operating status of approved companies,” the report said.

“In addition, it is more effective to guarantee the development of the industry and the interests of the society as a whole, and prevent the occurrence of unfavorable conditions for the development of the gaming industry.”

In total, 134 people responded to this aspect of the consultation, with 57 approving, 38 opposing it and 39 having no clear opinion one way or the other.

The report said that most people said the introduction of representatives would “help the government and the society to monitor and approve companies and ensure that they operate legally, ensure that the approved company fulfils contractual obligations, enhances transparency, and facilitates communication with the government and prevents the approved company from violating regulations”. 

However, some respondents were concerned that the change would lead to “too much interference” in company affairs, and so recommended clearer definitions for the functions, powers and responsibilities of these representatives.

Others noted that, despite high levels of supervision in some other jurisdictions, the introduction of government representatives would be unprecedented, making it hard to predict the consequences.

As a result, the report noted that any plans to introduce representatives must be “carefully considered and balanced”.

A key topic area for the Macau market in late 2021 was that of junkets, after the arrest of Alvin Chau, who was chairman of the region’s largest junket operator, SunCity.

Chau was one of 13 people suspected of creating an illegal live betting platform in the Philippines, which attracted customers from mainland China via a Macau-based junket. The group is then said to have used local bank accounts to transfer its revenue from the operation.

In the consultation, the Macau government proposed “strengthening the review mechanism” for intermediary businesses, highlighting junkets in particular. This, it said, may include a “qualification review” of people hired by intermediaries.

Of the 72 people who responded to this aspect of the consultation, 53 approved of the push for higher standards.

Some respondents suggested stricter restrictions, including a ban on lending money to VIPs.

“[Junkets] have played a positive role in promoting Macau’s overall economy and tourism, and has also ensured the government revenue, but there are also illegal acts by shareholders, employees, gambling intermediaries and partners,” the report said.

“Therefore, the government attaches great importance to the qualification review of all entities participating in gambling activities, and it is necessary to establish comprehensive and effective prevention mechanisms to strictly ensure the healthy and orderly development of the gaming industry.”

Besides the introduction of representatives, the consultation also suggested other requirements for concessionaires.

These included requiring someone based in Macau to serve as managing director of the business, encouraging operators to use their profits to support the diversification of Macau’s economy and raising the amount of capital that operators must hold. All three moves were approved by the majority of respondents, the last one being approved unanimously.

Another proposal listed was the promotion of non-gaming projects, requiring resorts to feature more non-gaming activities in an effort to diversify Macau’s economy, after chief executive Ho Iat Seng warned last year of of Macau’s “excessive dependence” upon the gambling industry.

This was a widely popular recommendation, with more than 97% of responses in favour.

The government also proposed that licensees should take on a number of specific social responsibilities, including supporting small and medium-sized local businesses, protecting labour rights and taking part in philanthropic ventures. Again, this suggestion was widely supported.

Besides the elements of the consultation, respondents also suggested that online betting should be permitted and that the market for sports betting should be opened up. However, the government said it “does not approve” of these measures, due to concerns about addiction.

In addition, some argued that the gaming tax rate of 35% was too high. In response, the government said the issue “must be carefully considered and evaluated”.

Meanwhile, Macau’s Bureau of Gaming Supervision (DICJ) also announced that in 2021, operators in the Special Administrative Region brought in revenue of MOP83.86bn (£7.71bn/€9.21bn/$10.40bn).

While this was up 43.7% from 2020, it was still down 72.4% from 2019.

In December, revenue came to MOP7.96bn. This was up 1.8% from 2020 but down 64.8% from 2019.