Opinion
MACAU Licences
Macau’s gaming industry is almost exclusively dominated by the operation of games of fortune or chance, or other casino games whose legal framework is regulated by Law 16/2001 (the “Gaming Law” or “GL”). The Gaming Law stipulates that the operation of games of fortune or chance is restricted to public limited liability companies incorporated in Macau which have been granted a concession by way of an administrative contract by the MSAR
(“Concession”) (Cf. article 7.1 of the Gaming Law). The maximum number of Concessions is limited to three and are subject to a public tender before being granted (Cf. articles 7.2 and 8.1 GL).
gaming operators in Macau, we need to review the origins of the gaming industry in Macau that spawned such a convoluted system in the first place. Fortunately, this is simplicity in itself, as the entire infrastructure is underpinned by a single man - Stanley Ho.
Te 96 year old continues to be Macau’s richest billionaire having enjoyed a four-decade long monopoly of Macau’s gaming industry that began in the 1960s and ended just after the turn of the millennium. Gaming in Macau was introduced by the government into a region struggling to provide the bare necessities, due to the declining interest in Macau as a trading port, leading to Macau becoming the only place where legal gambling could occur in China.
Mr. Ho had already gained notoriety during the Second World War, smuggling goods and fuel into Mainland China from Macau - an activity from which he greatly profited - enabling him to build his business empire and make connections at every level of society. So when the opportunity to tender for the gaming monopoly concession in Macau presented itself, Mr. Ho and his backers won the bid, offering Macau a future in the tourism industry as well as improved infrastructure.
Gaming Control Board also announced formal investigationinto into the allegations of sexual misconduct made against Mr. Wynn.
Te scandals that rocked Wynn Resorts earlier in the year have met with consternation in Macau. In March 2018, the Gaming Inspection and Coordination Bureau held a meeting with the representatives of Wynn Macau to “better understand the situation” regarding the allegations against Mr. Wynn. While calls for Wynn Resorts to be split and sold have died down in recent months, there is still considerable interest in the idea that splitting Wynn’s domestic [US] and Macau assets, would offer a strategic advantage. If a split sale were to occur, a mainland China suitor would be favoured by the central government, increasing Chinese ownership of a valuable asset.
THE ORIGINS OF GAMING To understand the complications now facing
Stanley Ho’s ability in business and entrepreneurialism is unquestionable. In attempting to boost gaming revenues and tourism, he launched ferry services that would bring people from Hong Kong and Mainland China to Macau on ‘TurboJet’ high-speed jetfoils at affordable prices. He also brought in helicopter services to transport high rollers from Hong Kong to Macau.
In 2001, Stanley Ho’s monopoly was brought to an end as Macau transitioned from Portuguese hands to Chinese ownership. However, this is not to say that he was no longer involved in the highly competitive market. Ho retained a concessionaire’s licences and two of his legitimate 17 children were intricately woven into the new Macau gaming infrastructure, with Lawrence Ho Chairman of Melco Entertainment and Pansy Ho a co-owner of MGM Grand Macau.
Te Australia-based Crown Entertainment and US-based MGM were to face intense scrutiny due to their links to the Ho siblings. MGM’s partnership with Pansy Ho was particularly tested when Mr. Ho senior’s apparent links with
Chinese organised crime proved a hindrance for future business with Pansy’s partners. And despite a lucrative partnership with Lawrence Ho in Macau, Crown Entertainment abandoned its partnership in order to proceed with new licensing opportunities in Australia, as the country’s Gambling Commission sought to block any future licence tenders if Crown remained connected to the Ho family.
Te reason such partnerships between Stanley Ho’s children and publicly traded businesses were necessary, was due to the fact that when the government liberalised the gaming sector, ending the monopoly held by Mr. Ho, it introduced three concessions, or at least it did so ‘technically.’
Hong Kong-listed Wynn Macau holds one of the three main gaming concessions, Stanley Ho Hung-sun’s SJM and Galaxy, led by Hong Kong tycoon Lui Chee-woo, hold the other two. However, a fall-out between Galaxy and Sands, allegedly due to the joint-venture not satisfying the Nevada gaming regulator’s standards, led the Government to authorise a sub-concession agreement to satisfy both parties’ interests. Te result was that the concessions would become six, as sub-licences were granted to MGM Resorts, Melco Entertainment and Las Vegas Sands, with Macau now described as having “six autonomous and independent concessionaires.”
Macau’s Gaming Inspection and Coordination Bureau (DICJ) has stated that the sub- concession deals between Galaxy and Las Vegas Sands, Wynn Macau and Melco, and SJM and MGM were ‘duly authorised,’ and that it stands behind the idea that a sub-concessionaire’s fate isn’t necessairly conditional on the status of the main concessionaire’s licence. Meaning that if a main concessionaire lost its licence, the sub- concessionaire would remain independent and be able to continue opertion.
However, it’s been claimed that Macau legislators unfairly sold the public on market liberalisation based on only three casino licences, when six were created without consultation. A situation some politicians are trying to reverse.
Te government may also address the possibility of setting shorter terms for new concessions and allowing the renewal of current concessions by direct award instead of public tender. However,
NEWSWIRE / INTERACTIVE / MARKET DATA P85
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