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New gaming law points the way ahead for Macao’s casinos

Financial incentives offered for attracting overseas gamblers, junkets face tougher regulations; total of six concessions on offer – bidding process yet to be launched.

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Financial incentives offered for attracting overseas gamblers, junkets face tougher regulations; total of six concessions on offer – bidding process yet to be launched.

ARTICLE BY

PUBLISHED

READING TIME

Less than 1 minute Minutes

UPDATED: 22 Dec 2023, 4:45 am

Macao has a new gaming law which seeks to regularise rather than revolutionise the city’s premier industry and financial backbone.

Passed by the Legislative Assembly (AL) yesterday, the Legal Framework for the Operations of Casino Games of Chance does away with sub-concessions, offers financial incentive to casinos to attract overseas customers and regulates junkets more strictly. Another bill specifically dealing with junkets is due to be put before the AL shortly.

Lawmakers have also called on the government to protect employees who may have lost their jobs due to casino closures.

Secretary for Economy and Finance Lei Wai Nong and other government officials answered questions from lawmakers during yesterday’s final debate and vote.

Over the past five months, the legislature’s second standing committee has  reviewed the gaming amendment bill article-by-article, whose original version came into force in 2002.

The law was passed just in time before the expiry of the city’s three gaming concessions and three sub-concessions this coming Sunday.

According to the law, a financial incentive will be offered to casinos for attracting more overseas gamblers by reducing their 5 per cent levy on their gross gaming revenues (GGR) for social welfare and urban development in Macao.

In the original law, the levy stood at 4 per cent of GGR.

However, the government’s direct gaming tax rate of 35 per cent on operators’ GGR remains intact.

Lei said he hoped this would create incentives for the gaming operators to attract overseas gamblers, which he said the government believed would yield long-term benefits, as it would turn Macao into a world tourism and leisure centre. 

Currently, apart from the 35 per cent direct gaming tax rate, the operators pay five per cent of their GGR into the public coffers as an additional levy for social, cultural and other public causes, including two per cent earmarked for the public Macao Foundation.

Lawmaker-cum-current affairs commentator Ron Lam U Tou argued that giving financial incentives to the gaming concessions was not the way to guarantee more overseas gamblers, while some other lawmakers worried this would lead to a decrease in casino operators’ payments to the Social Security Fund. Therefore, Lam requested a separate vote on the article regarding the incentives to be offered to casinos, which was eventually passed with 31 votes in favour and only Lam against.

Lei said that the exact percentage of the incentives will be considered based on the government’s estimate of the casinos’ future gross gaming revenues, with further details to be specified by the relevant administrative regulations.

Lei underlined that the pandemic has affected local communities over the past two years, but nevertheless the government has not cut the budget for the Social Security Fund. Therefore, he pledged that the government will ensure that the reserves will always be sufficient for the fund.

The new gaming law bans sub-concessions, meaning that future gaming concessionaires will not be able to sell sub-concessions. According to the new law, the government can grant up to six gaming concessions. The old law had capped the number of concessionaires at three. It did not specifically mention the possibility of granting sub-concessions.

According to the new law, the up to six gaming concessions to be granted by the government will be valid for 10 years, with a possible extension of up to three years in exceptional circumstances, as the old gaming law, enacted in 2001, allowed gaming concessions to be valid for 20 years, with a possible extension to up to 25 years.

Currently, Macao’s gaming industry comprises three concessions (SJM, Galaxy and Wynn) and three sub-concessions (Venetian Macau, Melco and MGM). The three concessionaires hold one sub-concession each. All six operators have said that they will submit bids for new concessions.

The future gaming concessions will be the winners of a bidding process that has not yet been launched. All six gaming operators will have their licenses extended until the end of the year, for which they are required to pay a MOP 47 million premium. The signing of the extension is due to take place tomorrow, 23 June.

Many of the city’s casinos owned by the gaming concessionaires or sub-concessionaires are housed on premises that they do not own and are run by third parties, such as junket operators. They are informally known as satellite casinos.

While it was originally proposed in the amendment bill that the satellite casinos must be housed in buildings owned by the gaming concessionaires, management companies are now allowed to continue the operation on behalf of the respective gaming concessionaires or sub-concessionaires, even though they do not have to own the real estate in which they are located, provided that their owners are among the winners of the upcoming bidding process.

According to the new law, the management companies will no longer be allowed to share the revenues of the satellite casinos with the respective gaming operators. Instead, the latter will pay the former a management fee.

The number of satellite casinos owned by gaming operators but run by third parties – junkets in particular – ranged between 18 and 22 until a few weeks ago. Some of them have closed for good.

Lawmakers asked the government yesterday to take measures to protect the labour rights of the staff working for the satellite casinos.

Lei said that the gaming concessionaires and sub-concessionaires should assign the affected staff to work directly for them, adding that they must comply with the Macao labour law fundamentals when dealing with the staff of the satellite casinos, adding that employment is Macao residents’ greatest livelihood.

Under the new gaming law, each junket, officially known as licenced gaming promoter, can work for only one gaming concessionaire, and only in the form of a company, in exchange for a “commission” from the gaming concessionaires, so they will no longer be allowed a share in the concessionaires’ revenues.

Some lawmakers said they were concerned that this could limit the development of the junket sector. Lei said that the aim of the new law was to clarify the role of gaming promoters as partners of the gaming concessionaires providing convenience for transport, hotel accommodation, dining, and entertainment services to customers, as well as to prevent the junkets from expanding the scope of their business “without limit”.

Lei added that the further details of the junket regulation will be laid out in the future junket law.

Gaming Inspection and Coordination Bureau Director Adriano Marques Ho said the aim of the new law was to better monitor the VIP rooms of the satellite casinos which were not adequately regulated in the past, in order to promote the healthy development of the gaming industry.

Lawmakers have said they expect the future junket law will be passed as soon as possible so that the government’s gaming concession bidding process can get off the ground before long.

The government has still to announce its timeframe for the bidding process, The Macau Post Daily reported. 

 

UPDATED: 22 Dec 2023, 4:45 am

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