The 11th International Conference on the Legal Reforms of Macau in the Global Context saw a range of key legal issues facing the Asian gaming hub discussed in detail.
What is the future of the industry that makes Macau the gambling capital of the world? What model do we want for future decades? Is the continuation of today’s model justified? How do we reconcile quality of life for Macau’s population – partly sustained by the gaming industry, with increasing competition from alternative Southeast Asian markets? And what do operators want from Macau after 2022?”
These are not just some of the key questions the industry asks itself every day; they are also questions formulated by Nuno Sardinha da Mata, lawyer and partner of C&C Advogados, in a paper titled “The enigma of the sphinx and the Macau gaming law future” presented during the 11th International Conference on the Legal Reforms of Macau in the Global Context at the University of Macau on 25 and 26 October.
As Da Mata points out, while Macau’s gaming industry stakeholders are starting to ask these questions with greater regularity given the approaching expiry of the SAR’s six gaming concessions, local legal academia have been having the discussion for some time now. And rather than rely on best guesses for their answers, they prefer to delve into the real juridical repercussions that Macau’s license re-tendering process could bring to local gaming law.
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The conference – organized by the University of Macau and with the support of the Direcção dos Serviços de Assuntos de Justiça (Justice Affairs Bureau of Macau, DSAJ), the Rui Cunha Foundation and Galaxy Entertainment Group – highlighted experiences in other jurisdictions to provide some insight into what Macau might expect in the coming years.
According to Augusto Teixeira Garcia, subdirector of the Law Faculty of the University of Macau, “The idea of this conference was giving back to society,” adding that “critical thinking in the University is not enough – we need to learn from other people.”
It was with this in mind that the two-day conference combined discussions on current Macau gaming law with a look at similar renewal and retendering experiences in Africa, Europe and America.
Topics included the validity of the current model of concessions and sub-concessions, the role of junket operators and the social and economic impact of the industry on the city.
RENEWAL V RETENDERING
Long-time STDM lawyer Dr Rui Cunha observed that such discussions made a lot of special sense right now given that Macau is less than two years away from the seeing the first 20-year gaming licenses – those held by SJM Holdings and MGM China – expire in 2020.
“It is a good time to decide what we want and how we want it for the next two decades,” he said.
Dr Cunha, who played a key role in shaping Macau’s current gaming law, was quick to point out that this will be a retendering process, not a renewal of licenses. Were operators simply facing a renewal, there would likely be little change, however with a new tender comes the possibility that the Macau government will modify the requirements needed to apply for a new license, and those could have an impact on how the law itself is written.
As it stands, the licenses of all three concessionaires – SJM Holdings, Galaxy Entertainment Group and Wynn Macau – as well as their respective sub-concessions in MGM China, Sands China and Melco Resorts will expire by 2022, meaning the current legal cycle will peak at the same time, making it the ideal point at which to introduce changes to Macau gaming law.
Luís Pessanha, a part-time lecturer at the Faculty of Law of the University of Macau and legal adviser to the Legislative Assembly, stated there is a widespread view among legal experts that Law 16/2001 will need to be amended when 2022 arrives. The bill defines the concession terms and, according to Pessanha, an amendment delaying the re-tendering process to 2025 would remove the concept of sub-concessions and turn all current operators into “fully-fledged concessions.”
Changes to the law could also open the door for a public tender that could see new operators granted licenses, he added.
Regarding fiscal policy, Pessanha commented, “Macau has fiscal room to maneuver” from its current effective tax rate of 39% while “the local gaming industry is still so profitable that it can withstand a reduction in the tax rate.” However, he added, “we could do it but I don’t see any reason for it yet” given that Macau enjoys a solid position among regional peers and there is therefore no real need to grant fiscal help to operators.
Instead, Pessanha offered a mixed vision regarding the possibility of online gaming extending the capabilities of local operators under a new legal framework. While the coming years may also present the perfect moment to introduce online gaming into law, he added that “in terms of taxes it might not be very interesting”, as other regional jurisdictions such as the Philippines already have a well-developed online betting industry and enjoy a lighter fiscal policy.
More intriguing for Macau is the role of junket operators under the new legal environment. According to Ricardo Siu, Associate professor of the Business Management Faculty of the University of Macau, “cultivating the non-VIP gaming sector (mass market) should be the emphasis in moving forward for the industry, but the positive role of gaming agents on the practices of the gaming concessions in Macau should not be neglected.”
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Asked whether legislation would need to be changed so that junkets would have to apply for licenses, Chagas said “the law is very clear and we would need to make some adjustments to it” to introduce such provisions.
In general however, the 11th International Conference on the Legal Reforms of Macau in the Global Context highlighted the success story of the SAR’s gaming industry, with any looming changes to gaming law set to be relatively minor and focused solely on a handful of key issues, namely the concession and sub-concession situation.
In the meantime, gaming is inextricably woven into the economic and social fabric of the city and there should be no expectation of any drastic dismantling of an industry that, according to the International Monetary Fund, is set to make Macau the richest place on earth by 2020.
