Legislation review

Macau consultation finds support for 6 casino licenses, reduced length, higher standards for junkets

2022-01-06
Macau
Reading time 2:54 min

The Macau government has issued a report to its consultation aimed at reviewing and changing rules for the Chinese enclave's casino market. Respondents have supported plans to keep the number of operators allowed in the market at six, as the current concessions expire on 26 June 2022.

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. One of the key subjects with most responses was the number of concessions that the Macau government would issue in future tender processes, with 217 answers. 

Twenty-two of these responses 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.

The previous bidding process allowed for only three concessions, but it also enabled 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.

Furthermore, the second most popular issue for responses was that of the length of time for concessions. On this topic, 72 respondents, around half of those who expressed a preference, wished to reduce the length from the previous 20-year term. Meanwhile, 56 said the length should stay at 20 years, and 17 said it should be longer. Also, most respondents who wished for a shorter length recommended a 10-year term, with an option for extension to 15 under special circumstances.

Moreover, the report said that most people considered the introduction of government representatives in the boards of operators permitted to open casinos in Macau would “help the government and the society to monitor and approve companies and ensure that they operate legally, ensure that the approved company fulfills contractual obligations, enhance transparency, and facilitate communication with the government and prevent the approved company from violating regulations”. 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.

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

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, and approved with 97% in favor, 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.

In addition, respondents 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.

As reported by Yogonet this week, Macau watchdogs are expected to double down on digital yuan, according to a Reuters report. Experts believe regulators in the Chinese enclave will force operators to become testbeds for the digital currency, as casino owners prepare to bid for new licenses. Also, while the deployment of digital yuan remains to be implemented, Beijing has so far introduced a new scheme aimed at attracting foreign investors and boosting Macau’s diversification into financial services.

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