International edition
September 20, 2021

The local Commission wants a fair environment of competition for the operators

Macau sets to regulate VIP gaming market

(Macau).- The government of Macao Special Administrative Region (SAR) has decided to tighten its control over the SAR's VIP gaming market by bringing in a maximum ceiling over junket commission rates, according to a new administrative regulation promulgated in the latest issue of the SAR's Official Gazette.

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nder the newly-revised regulation, the SAR's secretary for economy and finance will be responsible for overseeing and determining the maximum junket commission rate and other remunerations local casinos paid to the junket operators. The secretary was also authorized to define the way the payments are made.

Unlike Las Vegas, a large part of Macau's gaming revenues comefrom the VIP or high-roller gambling, and local casinos rely on the junket operators, who work as agents, to bring the VIP gamblers to the gaming tables. As a reward, local casinos pay a percentage of bets placed by VIP gamblers to the junket operators as commissions.

The commission rate rose to a high of 1.35 % as competition heated up after the liberalization of Macao's gaming sector in 2002, compared with just 0.8 % when the sector was still monopolized by local gaming magnate Stanley Ho.

Urged by the SAR government, Macau's six licensed gaming operators has generally agreed that the maximum commission rate should stood at 1.25 %, which was also accepted by the SAR government.

The implementation of the commission cap is aimed at creating an environment of fair competition for the six gaming operators, said Tong Chi Kin, the spokesman of the SAR's Executive Council at a press conference last week.

To show the government's determination to end the commission war, a series of penalties were also included in the new administrative regulation. Casino operators who break the rules of the commission cap will be fined between us$ 12,658 and us$ 63,291, according to the regulation.

Secretary for Economy and Finance Tam Pak Yuen has said that he will officially announced the commission cap of 1.25 % when the new regulation become effective. The regulation will take effect 30 days after being promulgated in the Official Gazette.

The commission cap will help lessen the vicious competition in local VIP gaming market and increase the casinos' revenues, said Tsang Chung Luk, a professor of economics at the Macao Polytechnic Institute. However, he said that casino operators will still fight for more market shares through other ways such as increasing the number of casinos and gaming tables, of which the SAR government still need to strengthen its regulation.

Being the only place in China where gambling is legal, the SAR's gross gaming revenues for the first half of this year dropped 12 % year-on-year to us$ 6.52 billion. The six licensed gaming operators have so far built some 33 casinos in the tiny island city located at China's southern coast.

Being tired of the "destructive competition", Macao's six licensed gaming operators signed the agreement last month to establish the Chamber of Macao Casino Gaming Concessionaires and Sub-concessionaires, which will see the warring casino owners go back to the negotiating table.

Aside from the commission issues, the operators have urged the SAR government to reduce the gaming taxes, which, Stanley Ho said, were too heavy for local casinos, and will affect the SAR's competitiveness in Asia's gaming market, since Singapore, which will soon open its first casino, has a much lower tax rate of 15 %.

Macau's gaming sector has suffered from both the global financial crisis and Chinese mainland's visa restrictions which limit its residents' trips to the SAR.

Las Vegas Sands' 12-billion-dollar Cotai Strip project on an area of reclaimed land in Macao, which is slated to build 11 resorts with a total of 20,000 hotel rooms and a number of casinos and shopping malls has already been stopped when the global financial crisis made it hard for the company to seek funds to finance its projects.

The city's visitor arrivals for the first half of 2009 also decreased by 11.4 % year-on-year to just 10.4 million, with those from the Chinese mainland, its major tourist source market, significantly falling 17.3 %, according to the figures released by the city's Statistics and Census Service.

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