MACAU BUSINESS


“A more specific list for the “major employees” who are subjected to the investigation of ‘appropriate qualification’ (suitability), the criteria for ‘major financial decisions’ which has to be informed to the DICJ or the government respectively and so on, should


be further clarified” Ricardo Siu


Associate Professor of Business Economics in the Department of Finance and Business Economics, Ricardo Siu, told MNA. Nevertheless, Professor Siu considered that in the


enforcement of this revised law, more details in the operation level should be further clarified by the government to concessionaries and junket operators in the near future. “For example, a more specific list for the “major employees”


who are subjected to the investigation of ‘appropriate qualification’(suitability), the criteria for ‘major financial decisions’, which have to be informed to the DICJ or the government respectively, and so on should be further clarified,” he noted.


What will happen to the properties that operate casinos under service agreements with gaming concessionaires – known as ‘satellite casinos’ – has also left many doubts in the industry on how authorities plan to proceed. Satellite casinos’ are venues controlled by independent


investors, but who lease the gaming licence of one of the existing concessionaires, with about 18 satellite casinos currently operating in the city, mostly under SJM’s gaming license. Under the city’s new regulatory framework, any casino


operating in Macau will have to be established as an asset that is owned by a gaming concessionaire, implying the current ‘satellite casino’ system would have to be upended. A three-year transitional period will be granted for the entities


responsible for properties holding casinos operating under service agreements to create closer ties to any one of six concessions to be granted in future, with no more details provided in the law on how that transfer of assets would take place.


The ‘satellite’ issue


Macao’s Polytechnic Institute Centre for Tourism and Gaming Studies Professor Zeng Zhonglu told MNA that it is “not very clear” how concessionaires and satellite casino managing entities will comply with that regulation, and that it would be hard to envision how this transition could be completely implemented in under three years. “There needs to be a discussion to find solutions and face difficulties in the process,” Professor Zeng noted. The issue was at the centre of many legislator interventions


before the draft bill was put up to a first-reading vote at the Legislative Assembly plenary on January 24. The bill, which received the support of all but one lawmaker who voted against


24 MARCH 2022


the draft, led some legislators to question how that transition would proceed, and how resident workers directly employed by the managing entities would maintain their employment. In his reply to legislators, Secretary for Economy and Finance


Lei Wai Nong defended that the gaming law amendment does not intend to “kill or ban satellite casinos”, but that since casinos operated under gaming concessions are considered government properties, they would need to be defined in a way that they could be returned to government control in the future. Professor Siu, meanwhile, believed that “although this draft bill


may upset or shock most existing junket operators and the ‘satellite casino’ operators” it came as an “inevitable process to re-institute the organization of the industry. “The bill is necessary not only for gaining long-term support


from the Chinese government, but its acceptance by the international societies as a modernized casino tourism destination which is well-regulated/-monitored,” he added. Analysts had already posited to MNA that the inclusion of national security provisions under the recently revealed gaming law bill draft is surprising, and could represent Beijing’s concerns over containing capital outflows. For Professor Siu, the new gaming law proposal “conveys many clear messages to the gaming concessionaries about their rights and responsibilities” from the national security level to their business operations. “From my reading of Article 22 [which establishes gaming


operators’ duties] for example, business integrity is to be elevated through the explicit requirements like minimum internal control standards/procedures for the casino firms and higher public monitoring measures¨. This article established that gaming concessionaires would


now also have the obligation to seek authorisation from the DICJ, and any change to their company charter; install security surveillance equipment in casinos and maintain footage collected for a minimum of 60 days; be subject to a DICJ operational review every three years; and inform authorities of any major financial decision. The bill also specifies that casino operators will have to draw up a plan to promote responsible gambling, and licensees are expected to provide support for local small- and medium-sized companies, and activities of “public interest” and support for fields including science and the environment. “Clauses concerning social responsibility are very difficult to quantify. What does it mean to support social enterprises? How much should concessionaires allocate to satisfy the requirements and for the development of Macau?”, Professor Zeng told MNA. Under the bill, now submitted to the Legislative Assembly for


review, safeguarding national security is also described as one of the legislation’s main purposes, as well as sustaining Macau’s economic diversification, and the city’s sustainable development. In the future, the Macau government would have the right to


terminate the concessionaire’s contract for reasons including threats to national security, public interest, or the breaching of its contractual obligations. The bill will now be discussed article-by-article by the members of the Legislative Assembly second standing committee – chaired by legislator Chan Chak Mo - behind closed doors, before the seconding reading vote and ensuing publication in the Official Gazette. All eyes will then be on the public tender process to award the casino concessions.


*Additional reporting by Nelson Moura and Tony Lai


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