MACAU BUSINESS
purloining to the tune of at least HK$99.7 million (US$12.5 million) by a casino executive in charge of junket management in L’Arc casino. The incident was preceded by a high-profile alleged theft by a finance staff member making off with more than HK$520 million in September from junket operator Dore Entertainment Co. Ltd. Facing mounting pressure from an unnerved public
to overhaul the segment, the government has mandated all junket operators compile monthly financial reports and provide background information on their senior accounting and finance staff starting this year. Deutsche Bank gaming analyst Karen Tang said in a research note following the L’Arc incident: “We see this as just the first step in a series of regulatory tightening this year.” She believes the government will intervene more in the ways the junkets – who help Mainland punters splurge on gaming tables by lending them money and settling subsequent debts – raise their capital. This will include strictly prohibiting them from accepting deposits from the public, prompted by the furore stoked by the Dore incident. The government will also strictly enforce existing rules governing the casino middlemen providing evidence of no criminal record during the renewal of their licences, she added.
of Macau specialising in gaming law, expects there would be “a major expansion of gaming regulation” in the near future and that “the legislative process should unfold in 2016”. After recently delivering a presentation titled ‘Gaming Promoters in Macau: Current Regulation and Perspectives of Reform’ at a gaming conference in Peru, the legal scholar said, “This increase in regulation is justified and probably should have been done a few years ago.” Taking a beating as Chinese high rollers remain cautious in visiting and gambling in the city, VIP gaming revenue sank 39.9 per cent year-on-year to MOP127.8 billion in 2015. Compared to the heyday when it represented over 70 per cent of Macau’s gaming earnings, the VIP market only accounted for 54 per cent of total gaming revenue last year, the lowest since the liberalisation of the gaming market. But Prof. Godinho stressed: “Gaming promoters are necessary and will continue to be for the foreseeable future [in Macau] so the way forward is to improve and expand regulation.” He said it was noteworthy whether the government
would modify the legal definition of gaming promoters spelt out in an administrative regulation in 2002, which technically did not mention their role of granting credit to gamblers. The authorities only set up a subsequent regulation in 2004 on gambling credit, he noted. The government and the public should also mull whether the junket operators could be divided into different categories based on their scale and how to better ensure they comply with the rules of anti- money laundering, he added.
Blacklist
Apart from preventing the recurrence of Dore-like incidents, Zeng Zhonglu, professor at the Gaming Teaching and Research Centre of the Macao Polytechnic Institute, points out that the revamp in the legal framework of junket management should also “safeguard the interests of gaming promoters in a bid to ensure the healthy development of the segment.” While the administration should raise the
Rules justified
Following the enforcement of the new accounting and finance rules this year, 35 junkets failed to meet the requirements and submit relevant documents, leading to the failure of their licence renewals. According to the gaming regulator, there are now 141 licensed gaming promoters, or junkets, in Macau, down 22.95 per cent from a year earlier. In spite of putting the improvement of gaming
regulations at the top of his agenda, head gaming regulator Mr. Chan has yet to unveil his blueprint. He has only remarked that the Bureau would consult with the junkets and gaming operators before making any decisions, adding a possibility of “slightly raising the bar” for junkets. Jorge Godinho, visiting professor of the University
22 APRIL 2016
requirements of acquiring junket licences like past business performance, financial capability and registered capital, Prof. Zeng said it should consider allowing the junkets to compile a name list of debtors. “The past few absconding incidents and thefts are due to a credit crunch in the segment caused by excessive lending and also the inability of gamblers to settle their debts,” he posited. Junket operators have reiterated calls similar to
Prof. Zeng in the past few months about the establishment of a shared database of clients for whom they have granted credit. Kwok Chi Chung, president of the Association of Gaming and Entertainment Promoters of Macau, said this system could draw the attention of the junkets to some gamblers who are highly unlikely to repay their debts before deciding to lend them money. “This could prove useful for us but we, of course, want to make sure this will not contravene any existing laws,” he noted, as the sharing of information of their high rollers might breach the personal data protection act.
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