Proposed new licensing terms and regulatory requirements for Macau’s authorised junket entities, known locally as gaming promoters, will make it harder for them to conduct business, suggested respectively a junket trade group leader, and two gaming lawyers, in comments to GGRAsia.
The fresh conditions are in a new consolidating bill called “Regime for the exploitation of games of chance” that also covers so-called satellite casinos, and is due to have its first reading on Wednesday in the city’s Legislative Assembly.
The measure is separate from the gaming law amendment bill already going through the assembly. The government has said previously that Macau’s gaming framework needs to be updated as a linked issue to a fresh public tender process for Macau gaming rights.
Kwok Chi Chung, president of the Macau Association of Gaming and Entertainment Promoters, told GGRAsia that he identified several “negative” implications for the junket trade from the new consolidating bill.
“Each Macau junket will only be allowed to work with a single Macau casino concessionaire. This already greatly restricts the business conditions for the junket operators,” remarked Mr Kwok.
Individuals would no longer be licensed as junkets; only companies, the bill also states. Other legal proposals in the bill include the requirement that – should junket firms wish either to change their partnering casino concessionaire, or to change their shareholders – they would first have to obtain approval from the city’s incumbent secretary for economy and finance.
“Another licensing term the bill proposes is that, junket firms have to get MOP10 million [US$1.24 million] in share capital ready, in addition to a bank guarantee they need to commit,” Mr Kwok said.
He added: “Considering the difficult trade condition now, these required amounts were relatively challenging for the junket operators to commit now, not to mention the fact that the bill only allows them to receive commissions, and outlaws any casino revenue split [with a casino concessionaire] as their earnings.”
One “positive” aspect that Mr Kwok found in the new bill, was the licensing requirement that no fewer than 50 percent of a junket company’s share capital has to be held by a Macau permanent resident.
“This helps ensure people’s trust in the junkets: I believe this is to prevent scenarios where a junket operator defaults and its [non-local] bosses just run away without assuming liabilities.”
The junket trade association head believed that the enactment of the consolidating bill as currently framed, coupled with mainland China’s continuous crackdown on cross-border gambling activities, would still not mean Macau seeing “zero” junket operations. “We still have [source] markets in Hong Kong and Southeast Asia to cater to,” said Mr Kwok.
But Macau-based gaming lawyers Bruno Ascenção and Carlos Lobo, respectively see bleaker prospects for Macau’s junket trade.
Regulatory “overkill”
Regarding satellite casinos – that are currently owned by third-party investors but respectively make use of gaming rights of existing licences – they had been “highly reliant on the junket model”, Mr Ascenção told GGRAsia.
The lawyer added: “In what concerns the junkets, and the satellite casinos…it is now clear to see that casino concessionaires will not bother to do any business with them going forward as the risks clearly outweigh the returns. Almost two decades of absent supervision have given way to a flurry of regulatory overkill.”
Regarding the ongoing general role of junkets in the market, Mr Lobo expressed some concern about whether the proposed new regulatory burden would support the potential gains to be had from VIP customers drawn from overseas.
“All other [overseas] markets that the Macau government is asking to be targeted [as sources of customers] do not have the [travel] frequency or generate the revenue that justifies complying” with the proposed regulatory rules in both the consolidating bill, and the gaming law amendment bill.
The consolidating bill also does not address the possible role of “independent agents” operating in overseas jurisdictions that could potentially bring VIP gaming patrons to Macau, Mr Lobo suggested.
“I believe the industry would be better served by a law that dictates stringent suitability requirements, prohibiting certain activities, including receiving deposits and assisting [in] cross-border – mainland China-Macau – transfer of funds, and proper enforcement of laws and regulations,” Mr Lobo remarked.
The lawyer further explained, referring to the independent agents active in overseas markets: “They existed before [in Macau] and could be a way to diversify the source of customers when Macau borders finally reopen.”
Mr Lobo added: “I do not believe the bill intends to close that door – but I think that is what will happen if a specific rule for these smaller – sometimes international – junket representatives is not inserted into the bill.”
