Macau Legislative Assembly passes draft bill on new junket, satellite casinos regulations

Macau’s Legislative Assembly (AL) has passed the draft of a bill set to clarify roles and rules for junket entities, their sub-agents, the much-discussed “satellite casinos” and their managing entities, and the relationships these parties establish with gaming concessionaires.

The legislation, titled “Legal Framework for Operating Games of Chance in Casinos”, was first unveiled in late March on the website of the AL. The legislative proposal is separate from the amendment bill relating to the gambling hub’s existing gaming law, which is also currently in discussion at the Legislative Assembly.

The new bill, if approved in its final form, would replace the Administrative Regulation 6/2002, which passed 20 years ago. These regulations governed the licensing and activities of gaming promoters, most commonly known as junkets, which have become a source of debate and controversy as of late as city officials seek greater control over their operations.

The draft of the “Legal Framework for Operating Games of Chance in Casinos” bill proposes that in order to obtain a license, gaming promotion companies will have to hold a social capital not inferior to MOP10 million (US$1.2 million), reports Macau Business. 

Macau Legislative Assembly

Additionally, a majority stake in the company must be held by a Macau resident, and the entity must not hold any gaming-related outstanding debts. The bill was presented by Secretary for Economy and Finance Lei Wai Nong, who stated the legislation will clarify oversight mechanisms and responsibilities of the entities targetted.

According to Lei, this will allow Macau’s gaming industry to develop in what he described as a “healthy and organized” fashion, while preventing illegal acts such as unauthorized deposits. “We just want to reinforce and clarify the legal requirements already in force for the last 20 years,’ he stated.

In addition, the draft bill determines junket operators are to be prohibited from contracting for the exclusive use of a casino gaming area for VIP clubs, and also banned from sharing gaming revenue with concessionaires, thus only able to receive a management fee.

While many legislators agreed the bill was necessary to prevent illicit activities within the sector, some argued the opinions of gaming operators should be taken into account, while others expressed concerns that limiting junkets to only commissions could render them unprofitable.

The new legislation also aims to set out the definitions of casino management companies, junkets, “collaborators” -people with a network of contacts that introduce high-value players to gaming promoters- and satellite casinos. The bill states that collaborators would be forbidden from extending credit to players.

The legislation also recognizes a management company as an entity managing all or part of a casino of a gaming concessionaire. These companies have traditionally managed services at “satellite casinos”: facilities running under a license attached to one of the city’s six concessionaires, but operated by third parties on individually owned premises.

The new bill sets out licensing and approval requirements for management businesses, as well as a regulatory framework in which these companies will operate. According to earlier reports, the provisions in the new bill state that junket representatives, collaborators or management companies found to have accepted “illegal” player deposits might be jailed for between two to five years, or fined up to MOP$1.5 million ($184,000).

Grand Emperor Hotel, an example of a venue featuring a satellite casino

The general gaming law bill also in discussion at the AL also tackles some of these issues, and proposed increased penalties against accepting illegal deposits from promoters. Additionally, the legislation states managing entities and junket operators will only be allowed to establish business contracts with one gaming concessionaire only.

The Macau gaming industry has suffered a series of major changes as of late, especially in regards to gaming promoting entities and “satellite casinos.” VIP rooms around the city have mostly closed, while Alvin Chau, CEO of junket heavyweight Suncity, was arrested late last year.

Meanwhile, the general gaming law amendment proposal suggests “satellite casinos” would need to be acquired by licensees if the properties are to continue operating. However, this has been described as an “unlikely” scenario, and many satellite venues are expected to close in the near future.