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Macau Legislative Assembly publishes draft bill on amendments to gaming law

Ben Blaschke by Ben Blaschke
Tue 18 Jan 2022 at 12:11
Macau legislator urges SAR government to introduce online gambling
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Macau’s Legislative Assembly has published the draft bill “Amendment to Law No. 16/2001 – Legal framework for the exploitation of games of chance in casinos” ahead of the re-tendering of the SAR’s casino licenses.

As foreshadowed by Inside Asian Gaming, publication of the draft bill comes just days after the government held a press conference on Friday at which it provided clarity on many key issues. These included confirmation that up to six concessions would be granted following the upcoming re-tendering for casino licenses and that each concession would be for 10 years with the possibility of extending by up to three years under exceptional circumstances.

Among further details contained in the draft bill – published in both Traditional Chinese and Portuguese – are new rules around the future of junkets following Friday’s revelation that dedicated junket rooms in Macau’s casinos and revenue share arrangements between junkets and casino concessionaires will be prohibited under the gaming law amendments.

Those prohibitions are indeed stipulated in the new bill, which forbids gaming promoters “to share, in any form or agreement, with the concessionaires, the revenues from the casinos, or the exclusive exploitation of the areas reserved for the casinos by contract, being limited only to the provision of support to the concessionaires in the promotion of gambling activities in casinos, through commissions.”

In a major change of policy, the Secretary of Economy and Finance will continue issuing junket licenses to approved VIP promoters but will restrict each licensed promoter to “only carry out the activity of promoting games in one concessionaire.” This will significantly weaken the market strength of junket operators compared to years gone by when major junkets operators would have a dedicated VIP room or even multiple rooms in all six concessionaires.

It also prevents gaming promoters from using third parties to conduct business “except in situations deemed necessary by their partners, members of the management body or employees.”

In a further blow to the junket industry, the government will ask concessionaires to administer a 5% withholding tax on all junket commissions. While such a stipulation already exists in Law 16/2001, successive Chief Executives have ordered a lower rate of withholding of less than 1%. IAG understands the full 5% withholding tax will be charged in future upon passing of the amended law.

The bill provides for a maximum number of gaming tables and gaming machines each concessionaire will be authorized to operate each year. This will be closely linked to business volume with the Chief Executive to determine a “minimum annual limit of gross income from each gaming table and gaming machine”. If this minimum annual income is not reached, the concessionaire will be required to make up the difference and if not reached for two consecutive years, the Chief Executive may reduce the number of tables or machines authorized for use.

Concessionaires will also be subject to a review every three years in which Macau’s gaming regulator, the Gaming Inspection and Coordination Bureau (DICJ) will examine general contractual compliance. A failure by any concessionaire to comply with the stipulated terms of their contracts, or a lack of proactivity in doing so, will be referred to the Secretary for Economy and Finance.

In what may be the most significant development to emerge from publication of draft bill is the apparent absence of any clear reference to the payment of dividends by concessionaires to their shareholders, typically the wider listed entities operating the entire integrated resorts offering. The government’s initial consultation document, released in August, had included a proposal that concessionaires require government authorization before declaring dividends and was arguably the single most discussed issue among investors in the months that followed.

However, the draft bill does not specifically mention any requirement for dividend approval, with the only reference seemingly associated being a short clause stating, “The concessionaires must inform the Chief Executive before executing any major financial decisions that exceed those stipulated in the contracts.”

On share capital and the shares of concessionaires, Article 17 confirms details released last week increasing the minimum capital each concessionaire must hold from MOP$200 million (US$25 million) to MOP$5 billion (US$625 million). The bill says concessionaires “are obliged to prove that the capital is paid up in cash or bank bill, as well as to present the respective supporting documents”.

It is also stipulated that any intention by concessionaires to explore new business opportunities must first be approved by the Secretary for Economy and Finance. It is unclear whether this refers to gaming operations, either existing or future, in other jurisdictions.

The bill outlines a series of expectations around each concessionaires’ Corporate Social Responsibility (CSR) initiatives with the government demanding:

  • Support for the development of small and medium-sized enterprises;
  • Support for the development of diversification of local industries;
  • Ensuring of workers’ rights and interests, namely concerning in-service training and professional advancement of local workers as well as the social security system designed to protect workers;
  • Hiring of disabled or disabled individuals;
  • Support for activities of public interest;
  • Support for activities of an educational, scientific and technological nature, environmental protection, culture and sports, among others.

Concessionaires must “prepare a plan to promote responsible gambling” periodically reviewing and improving said plan and measures. They must also “adopt measures that allow the public, including tourists, to have sufficient information for them to assume a responsible, moderate and controlled posture in the game.” An annual plan to promote responsible gaming for the next year must be submitted to the DICJ as well as a report on the execution of the previous year’s plan.

IAG will publish a number of stories in the coming days clarifying various aspect of the draft bill.

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Tags: concessionairesdraft billGaming LawJunketsLegislative Assemblylicense re-tenderingMacau
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Ben Blaschke

Ben Blaschke

A former sports journalist in Sydney, Australia, Ben has been Managing Editor of Inside Asian Gaming since early 2016. He played a leading role in developing and launching IAG Breakfast Briefing in April 2017 and oversees as well as being a key contributor to all of IAG’s editorial pursuits.

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