A draft of the much-expected gaming law bill was only fully revealed on January 18 following a press conference held by the Executive Council and was approved by the Legislative Assembly for committee-level discussion this week.

Among many changes, the draft bill sets a maximum of six gaming concessions that can operate for up to ten years, with a 3-year extension possible under exceptional circumstances. The amendment proposal also includes a number of new regulations for both casino operators and gaming promoters.

“Overall speaking, my impression on this draft bill is that it stresses on strengthening the supervision of the industry as a whole, and chopping down the most socially/administratively controversial segment (i.e., the traditional junket operator-run VIP gaming activities and gambling rooms) associated with the practice of Macau’s casino gaming industry,” University of Macau Associate Professor of Business Economics in the Department of Finance and Business Economics, Ricardo Siu, told MNA.

The researcher considered that the new articles being included in this bill “clearly exhibit the determinate decision of the government to ensure sustained growth for the industry” instead of “continuously allowing it to chase a high business turnover”.

Under the bill proposal, each gaming promoter will only be allowed to operate with one gaming concessionaire and limits their operations only to the provision of support to the concessionaires in the promotion of gambling activities in casinos, through commissions.

The draft bill also bans junkets from resorting to third parties to carry out business with the exception of “situations deemed necessary by their partners, members of the management body or employees.”

The Macau government has also proposed to include in the city’s gaming law penalties against illegal deposit-taking from the general public either by casino concessionaires, their shareholders, or employees, for some form of return, and infractions could face a sentence of up to five years in prison or a fine.
Nevertheless, Professor Siu considered that in the enforcement of this revised law, more details in the operation level should be further clarified by the government to concessionaries and junket operators in the near future.

“For example, a more specific list for the “major employees” who are subjected to the investigation of “appropriate qualification”, the criteria for “major financial decisions” which have to be informed to the Gaming Inspection and Co-ordination Bureau (DICJ) or the government respectively and so on should be further clarified,” he noted.

What will happen to the properties that operate casinos under service agreements with gaming concessionaires – known as ‘satellite casinos’ – has also left many doubts in the industry on how authorities plan to proceed.

Satellite casinos’ are venues controlled by independent investors, but who lease on the gaming licence of one of the existing concessionaires, with about 18 satellite casinos currently operating in the city, mostly under SJM’s gaming license.

Under the city’s new regulatory framework any casino operating in Macau will have to be established in an asset that is owned by a gaming concessionaire, implying the current ‘satellite casino’ system would have to be upended.

A three-year transitional period will be granted for the entities responsible for properties holding casinos operating under service agreements to create closer ties to any one of six concessions to be granted in future, with no more details provided in the law on how that transfer of assets would take place.

Macao Polytechnic Institute Centre for Tourism and Gaming Studies Professor, Zeng Zhonglu, told MNA that it is “not very clear” how concessionaires and satellite casino managing entities will comply with that regulation and that it would be hard to envision this transition could be completely affected under three years.

“There needs to be a discussion to find solutions and face difficulties in the process,” Professor Zeng noted.

The issue was at the centre of many legislator interventions before the draft =bill was put up to a vote at the AL plenary, who questioned how that transition would proceed and how resident workers directly employed by the managing entities would maintain their employment.

In his reply to legislators, Secretary for Economy and Finance Lei Wai Nong defended that the gaming law amendment does not intend to “kill or ban satellite casinos”, but that since casinos operated under gaming concessions are considered government properties, they would need to be defined in a way that they could be returned to government control in the future.

Professor Siu, meanwhile, believed that “although this draft bill may upset or shock most existing junket operators and the ‘satellite casino’ operators” it came as an “inevitable process to re-institute the organization of the industry.

“[The bill is necessary] not only for gaining long-term support from the Chinese government but its acceptance by the international societies as a modernized casino tourism destination which is well-regulated/-monitored,” he added.

Analysts had already posited to MNA that the inclusion of national security provisions under the recently revealed gaming law bill draft is surprising and could represent Beijing’s concerns over containing capital outflows.

For Professor Siu, the new gaming law proposal “conveys many clear messages to the gaming concessionaries about their rights and responsibilities” from the national security level to their business operations.

“From my read of Article 22 [which establishes gaming operators’ duties] for example, business integrity is to be elevated through the explicit requirements like minimum internal control standards/procedures for the casino firms and higher public monitoring measures.

This article established that gaming concessionaires would now also have the obligation to seek authorisation from the DICJ any change to their company charter; install security surveillance equipment in casinos and maintain footage collected for a minimum of 60 days; be subject to a DICJ operational review every three years; and inform authorities of any major financial decision.

The bill also specifies that casino operators will have to draw up a plan to promote responsible gambling, and licensees are expected to provide support for local small- and medium-sized companies, activities of “public interest” and support for fields including science and the environment.

“Clauses concerning social responsibility are very difficult to quantify. What does it mean to support social enterprises? How much should concessionaires allocate to satisfy the requirements and for the development of Macau? It is not clear?” Professor Zeng told MNA.

Under the bill now submitted to the Legislative Assembly for review, safeguarding national security is also described as one of the legislation’s main purposes, as well as sustaining Macau’s economic diversification, and the city’s sustainable development.

In the future, the Macau government would have the right to terminate the concessionaire’s contract for reasons including threats to national security, public interest, or breaching of its contractual obligations.

The bill will now be discussed by the members of the AL second standing committee under closed doors, with no sessions scheduled for this month, with the first committee meeting expected after the Chinese New Year holiday period.