Relicensing now set to start

Macau lawmakers approve new gaming law allowing six licenses for 10-year periods

2022-06-21
Macau
Reading time 2:37 min

Macau’s Legislative Assembly approved the city's new gaming law on Tuesday. The finalization of the legislation paves the way for officials to begin the process of issuing new casino licenses, as the current ones expire this year.

The new bill, approved by the 32 legislators present, will replace legislation in force since 2001, and increase the oversight of SAR authorities in the gaming sector of the city.

Under the new legislation, the number of new licenses is limited to six, and the new permits will be given out for up to 10 years, down from the current 20 years. Macau officials are given the power to punish casino operators for a number of reasons, including under-performing revenue and threatening national security.

Furthermore, gaming taxes have been raised marginally from 39% to 40%, including 35% in direct gaming taxes and a flat 5% tax for social welfare and urban development, representing a whole 1% more than before. The 5% tax in indirect taxes could however be reduced if operators manage to attract more overseas players to their casinos, as reported by Macau Business.


Macau's Legislative Assembly

Additionally, casinos now must be located on premises owned by concessionaires, but after a three-year transitional period, casinos in properties not held by the concessionaire (satellite venues) can be operated by a management entity that can only receive management fees for site services and not a share of gaming revenue.

License holders will also be required to have a registered capital of at least MOP5 billion ($618,7 million) for the whole duration of their license; concessionaire and anyone holding more than 5% in the operator cannot directly or indirectly hold any capital in any other concessionaire.

When setting the number of tables and slots permitted, the CE will consider the license holder’s operations, its investment made in non-gaming elements, and the overall Macau economy. A gaming concession could also be revoked for reasons of threatening national security or failing to meet the duties of a concessionaire such as paying taxes on time, with the holder having to return its gaming area/ capacity to the government without compensation.

Casino operators will have to draw up a plan to promote responsible gambling, while there will be a maximum number of gaming tables and machines each license holder will be allowed to operate, according to the bill. If approved, casino operators would no longer have dedicated junket rooms, and revenue-sharing arrangements between the two parties would be prohibited, while approved VIP promoters will be restricted to only operating in one concessionaire.

Several changes were introduced in the initial draft bill during the five months it was under evaluation by the AL second standing committee, with the most notable being allowing satellite casinos to continue operating under new managing entity agreements and increasing indirect taxes. Separate gaming legislation concerning the business relations between gaming concessionaires, junket operators, sub-agents, and satellite casino managing entities is also currently under evaluation by the second standing committee.

The overhaul comes as Beijing pushes the city to reduce its reliance on gaming revenue and diversify into industries including Chinese medicine, events, tourism, technology, and finance. China has also accelerated its crackdown on the enclave’s high-rolling gambling sector, with the new law placing tight restrictions on how the industry could operate, over concerns about its role in facilitating capital outflow. 

The changes to the world’s biggest gambling hub are taking place against the backdrop of a continued tourism drought that’s costing casinos millions in losses every day. Gaming revenue has plunged up to 97% during the pandemic and was still down 87% in May amid rolling lockdowns across mainland China, where most of Macau’s bettors come from, as reported by Bloomberg.

The city's six current concessionaires are expected to have their licenses extended temporarily to December while the new tender process is underway. Macau's government is expected to formally sign the six-month license extensions on June 23.

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