The Macau government has suggested a need to approve dividend distribution to shareholders by the city’s casino operators. The proposal is included in a government document regarding the revision of the city’s gaming law, published on Tuesday and put for public consultation starting on Wednesday (September 15).
In the document, the government proposes to include a provision in the city’s gaming law stating that the distribution of dividends to shareholders by the city’s casino concessionaires – either in cash or shares – “cannot be done unless it fulfils specific requirements” yet to be disclosed, and “obtains prior authorisation from the Macau government.”
The document says the move aims to ensure that profits from gaming operations are “properly applied in promoting the sustainable development of Macau,” including the city’s economic diversification.
Lei Wai Nong, Macau’s Secretary for Economy and Finance, said during a Tuesday media briefing on the gaming law revision that the casino industry was “special” and it involved “huge amounts of capital and investment.”
“The government needs to see if they [casino operators] are financially capable to … fulfil their contractual requirements,” said Mr Lei. He noted that the government would not interfere in “normal business practices” if casino concessionaires met the requirements set in their contracts.
In a Tuesday memo, brokerage Sanford C. Bernstein Ltd suggested that the government’s goal was “not to necessarily limit shareholder distributions, but rather to make sure that proper investment is being made” in the Macau market. The institution highlighted that there was already a restriction in place in Macau, “that limits dividends [by casino concessionaires] to retained earnings.”
The Macau government document published on Tuesday also suggests that the minimum share capital requirement for any local casino concessionaire should be increased from the existing MOP200 million (US$25 million) threshold, an amount set by the current gaming law, enacted in 2001. The document does not however suggest a new figure.
“The existing legal framework has been in force for about 20 years, and during this period, gross gaming revenues grew by 21.5 times by 2019, compared to 2000,” noted the government.
The document also proposes to include in the gaming law penalties against illegal deposit taking from the general public by casino concessionaires, their shareholders or employees. It suggests offenders could face a sentence of up to five years in prison.
In recent years, Macau recorded several high-profile cases of alleged theft in casinos of large amounts of deposits taken from private investors, usually involving junket operators. Until recently, it was common for junkets in Macau to raise capital to finance their rolling chip programmes by offering private investors above-market interest rates for their deposits.
Other government suggestions featured in the document put up for public consultation include: scrapping the casino sub-concession system that currently exists in the Macau market; revising the duration of any new concession term; introducing new regulatory requirements covering casino concessionaires; and strengthening the steps to protect local employment in the gaming industry.
The 45-day public consultation will run until October 29, said the Macau gaming regulator in Tuesday’s press briefing.
Sep 21, 2021A Macau government proposal that its approval should be required before local casino operators could distribute dividends to shareholders came as a “surprise”, management at Macau licensee SJM...
”The Macau government is not aiming to trivialise or drive out the junket sector, but to regulate the sector so that it would not hurt Macau’s reputation”
Alvin Chau Cheok Wa
Chief executive of privately-held VIP junket business Suncity Group