MACAU BUSINESS
Polytechnic Institute), to whom “at least six licences need to be granted to keep all the operators in, as well as resolving legal disputes caused by the sub-concessions.” “The government will most certainly run some form of an RFP [request for proposals] process with criteria that will make existing concessionaires the evident winners of new concessions [effectively renewals] but likely under new terms, with a potential for economic costs,” we can read in a note from brokerage Sanford C. Bernstein Ltd. (2017). How can the bidding process be restricted? “The government can set some criteria. For those companies who are qualified under such circumstances or conditions they can go for public bidding,” explained Professor Davis Fong, Director of the Institute for the Study of Commercial Gaming at the University of Macau, and now a lawmaker, last year.
3. A public tender benefiting the six operators (without additional economic costs) A public tender which benefits the six operators could mean ‘a potential for economic costs,’ says one research note from brokerage Sanford C. Bernstein Ltd. And the explanation is simple: if the
government custom tailors a suit to fit the Big Six that fact will have to make that suit more expensive.
The additional costs may be due to a slight
increase in taxes payable or new requirements; for example in the area of corporate social responsibility or non-gaming. But there will be no shortage of individuals
recalling that Macau concessionaires already pay the highest rates in the region, and Angela Leong of SJM has even spoken of the need to
reduce operators’ costs: “Our taxation mechanism has space for adjustment,” she said last year. The member of the Legislative Assembly also predicted: “As for what I believe, the government should be prepared for a rainy day.” As background music, one can follow the ‘opening bars’ of gaming in Japan and the need to pay close attention to the timetable and taxation system Japan imposes when it does open its casinos, as Secretary Leong has already conceded.
4. An open and free public tender (the one nobody believes will happen…) There is a fourth scenario, one in which almost no-one believes but which is still possible at this point: if the law is not altered, there may be a public tender free of any constraints. This means that the government would opt for the expiration of the six licences and start all over again.
What is curious is that this perfectly legal
scenario would cause a real earthquake in Macau, since the six operators do not doubt that, at more or less cost, they will continue to operate. Why does no-one believe this will happen? Because this would cause enormous social turmoil (current operators could only work with non-gaming, which would lead to a large increase in unemployment) and even political- administrative repercussions: the land concessions of major gaming projects only expire between 2026 and 2038, with not enough land for the new operators. “What is in the law is that when the current gaming concessions finish in 2020 or 2022 their gaming materials are delivered to the MSAR and a public tender is made. I see people admitting other scenarios because they don’t believe the government will respect what is in the law,” the president of the Macau Lawyers Association, Jorge Neto Valente, said some months ago. (Six licences or more licences? Less? The text on the following pages tries to answer)
Room for one more? “S
Seven? More? Five? Less? Anything is possible, they say, but some scenarios are more possible than others…
ix licences might still not be good enough. We can reasonably imagine that the Macau Government
would be fiercely criticised if only the incumbents survived the ‘public’ bidding procedure while not even one new player makes it through,” Changbin Wang, professor of Gaming Law and Regulation at the Gaming Teaching & Research Centre (Macau Polytechnic Institute), wrote in 2015. “Therefore, the government will
20 APRIL 2018
probably have to increase the number of casino licences to seven or eight in order to alleviate public criticism,” said the Macau based-scholar, referring to “a persistent rumour . . . that the government intends to add one more licence, probably to a local bidder.” Macau Business contacted Professor Chongbin for this story, who reaffirmed what he had written almost three years ago, words that give rise to two different ideas: the possibility of having at least a seventh operator and the interest in the newcomer being a local company.
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