Welcome to the first in a series of articles on the Macau gaming law IAG intends to publish through the month of March and in early April. While much has been discussed about the gaming law changes and the impending re-tendering process, there are many areas yet to be explored, and more than a few unintended consequences lurking in the draft law as it currently stands. This series will explore and analyse these issues and offer opinions on how they might be addressed.
| Part | Date | Article |
|---|---|---|
| 1 | Wed 2 Mar | Here comes the extension … 26 June now seems impossible |
| 2 | Fri 4 Mar | Cross-shareholding provisions crossing the line? |
| 3 | Mon 7 Mar | Problematic consequences of the satellite purge |
| 4 | Wed 9 Mar | Does the chip cap need a rethink? |
| 5 | Fri 11 Mar | Reversion of gaming areas – a problem no one is talking about |
| 6 | Mon 14 Mar | Directors’ liability – changing centuries of corporate law? |
| 7 | Mon 16 Mar | Junkets, collaborators and concessionaire liability |
| 8 | Fri 25 Mar | Minimum income – a stealthy gaming tax rate hike? |
| 9 | Mon 28 Mar | National Security – a get out of jail free card for the government? |
| 10 | Fri 1 Apr | Confusion reigns over so-called “Managing Director” shareholding |
| 11 | Sun 3 Apr | 10-year concessions hamper investment in Macau |
| 12 | Wed 6 Apr | Too broad suitability checks will dilute their effectiveness |
| 13 | Thu 7 Apr | Provisions regarding other jurisdictions can cause legal conflict |
| 14 | Fri 8 Apr | And that’s a wrap – where to from here? |
Unless you have been hiding under a rock for the past nearly six months, you’d know the Macau gaming industry has been abuzz about the fact that our six 20-year gaming concessions all expire on Sunday 26 June this year. Precisely what changes will happen to the industry from that fateful day have been looming large.
After years of silence on the matter, the Macau government shifted straight from first gear to overdrive on Tuesday 14 September last year, less than 48 hours after the latest Legislative Assembly election, which are held quadrennially. The Secretary for Economy and Finance, Lei Wai Nong, with barely a few hours notice to the media, held a press conference at 5pm that day, after the Hong Kong markets had closed.
That press conference was a bombshell, dropping a raft of major new proposals, announcing a 45-day consultation period for the public to discuss them, and to many seemingly shifting the government’s posture instantaneously from a lazy meandering stream to a raging torrent. The market was not ready for this, and the full force of the bombshell was not felt until the next day, which saw some 26% of market capitalization – which had taken around 15 years to build – wiped from the Macau concessionaires. Around US$20 billion in value was lost in a single day.
It has been clearly apparent from that fateful September day right up to now that the Macau government has been on a mission to get this done by 26 June this year if humanly possible. The government ran a 45-day consultation process, rather than a 60-day process which is more usual in Macau. When COVID affected the process, the government crammed four consultation sessions into the final four days – including, shock, horror, a Sunday – to make the deadline. The detailed report on the process – which much to the industry’s pleasure adopted a substantial number of their suggestions – dropped at 5pm on the day before Christmas Eve, less than two months after the consultation period ended. The draft legislation, expected after Chinese New Year, appeared on the website of Macau’s Legislative Assembly (AL) in mid-January, and had its first reading under a week later – all before Chinese New Year.
If, and only if, the AL rushed the bill through and rubber stamped it with little debate or discussion, there might just have been a chance to make it by 26 June. Had the AL done such a rush job, passing the legislation with little or no amendment by say early March, there could have been time for a hasty six-week tender process to say mid-April, then a couple of weeks for evaluation, say six weeks of contractual negotiations with the successful bidders, and finally a signing ceremony in late June – just in the nick of time to crack open the champagne and beat the 26 June deadline by mere days.
Alas – or depending on your point of view, hurrah – this is not to be. Several issues about the draft bill have been raised by the AL’s Second Standing Committee – the body responsible for reviewing the bill – including the planned treatment of satellite casinos, the concessionaire’s so-called “Managing Director” and new national security provisions in the draft bill.
Indeed, Andrew Chan Chak Mo, the Committee’s chairman, has already suggested to local Chinese media that while the second reading of the bill could be this month, the bill will likely not pass until late June – and that the government should therefore extend the six concessions beyond the 26 June deadline by a year.
I think it’s now clear no course of action other than an extension is possible. But I suspect, given the Macau government’s clear intent to keep the pressure on and get this done as quickly as possible, that a six-month extension is more likely than a year. That would shift D-Day from 26 June to 26 December, making Boxing Day the new deadline. Of course, that doesn’t mean there couldn’t be a further extension if needed, as the current gaming law provides for the government to extend as many times as it likes up to a cumulative total of five years. Conversely, it doesn’t mean the process couldn’t be finished before Boxing Day.
For the sake of clarity in the market, I would expect such an extension to be announced soon, likely this month. Watch this space.
| Part | Date | Article |
|---|---|---|
| 1 | Wed 2 Mar | Here comes the extension … 26 June now seems impossible |
| 2 | Fri 4 Mar | Cross-shareholding provisions crossing the line? |
| 3 | Mon 7 Mar | Problematic consequences of the satellite purge |
| 4 | Wed 9 Mar | Does the chip cap need a rethink? |
| 5 | Fri 11 Mar | Reversion of gaming areas – a problem no one is talking about |
| 6 | Mon 14 Mar | Directors’ liability – changing centuries of corporate law? |
| 7 | Mon 16 Mar | Junkets, collaborators and concessionaire liability |
| 8 | Fri 25 Mar | Minimum income – a stealthy gaming tax rate hike? |
| 9 | Mon 28 Mar | National Security – a get out of jail free card for the government? |
| 10 | Fri 1 Apr | Confusion reigns over so-called “Managing Director” shareholding |
| 11 | Sun 3 Apr | 10-year concessions hamper investment in Macau |
| 12 | Wed 6 Apr | Too broad suitability checks will dilute their effectiveness |
| 13 | Thu 7 Apr | Provisions regarding other jurisdictions can cause legal conflict |
| 14 | Fri 8 Apr | And that’s a wrap – where to from here? |
[Ed: The very next day after the predictions in this article were published, the Macau government did indeed extend the Macau casino gaming concessions by six months.]
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