Each Macau junket will only be allowed in future to work with a single Macau casino concessionaire, but so-called ‘sub-agents’ – people that collaborate with Macau junkets to introduce players, but have not themselves historically been licensed by the city’s government – will still be permitted, subject in future to approval by the local regulator.
That is according to the details freshly tabled in relation to the draft bill announced on Friday, to update the city’s gaming regulatory framework. The bill was published on Tuesday on the website of the city’s Legislative Assembly.
In March last year, a local gaming scholar had told GGRAsia it would be helpful if the Macau government clarified the legal position of sub-agents when it updated the city’s regulatory framework.
The draft bill says junkets – referred to by the Macau authorities as “gaming promoters” – will need a licence issued by the incumbent secretary for economy and finance.
In addition, junkets will be forbidden to contract use of any part of a casino for operations in their own right. They will also be forbidden to share casino revenue, in any form or via any agreement, with any gaming concessionaire they work with, the draft bill says.
In Macau, junkets have historically been offered incentives to bring players to casinos, usually either via a share of the revenue generated, or via a commission on rolling chip turnover, with the latter customarily capped at 1.25 percent.
The draft bill defines a gaming-promoter entity as one that provides “certain conveniences” to gamblers, including transportation, accommodation, catering services and leisure offers. For such services, the junkets will be entitled under the terms of the draft bill to receive a commission from the gaming concessionaire at an amount “not higher” than “legally stipulated”; i.e., to be decided as part of the new regulatory framework.
Macau had - during a peak period of VIP gaming business prior to 2014 – more than 200 licensed VIP gaming promoters. But the city has seen an annual decline in their number from 2014 onwards, to a low of 85 licensed gaming promoters as of January 2021, according to official data.
The operation and licensing requirements for junkets and sub-agents would be formed via their own regulation, stated the draft bill.
The draft bill also stated the joint liability that gaming concessionaires and gaming promoters must bear, regarding junket-generated VIP business. It includes that gaming concessionaires will have a duty to inform the city’s casino regulator of any matters that might potentially affect a junket’s ability to cover their loans or financing requirements.
According to the draft bill, a withholding tax of 5 percent currently levied on commissions paid by gaming operators to junkets will remain at that level under the new incentives framework.
The sub-agents can be recognised as – in the legal jargon – “natural persons”, according to the bill. The gaming promoters will have to submit the names of the sub-agents they will work with to the gaming regulator, for approval.
The draft bill also bans any individuals from being simultaneously on the “governing bodies” of more than one of the following entities: gaming concessionaires, “management companies”, and gaming promoters.
The bill says the Macau government recognises a “management company” as entity that manages all or part of a casino of a gaming concessionaire. Historically, that has covered management services for functions at so-called satellite casinos.
Currently, there are 18 satellite casinos in the city; venues controlled by independent investors but that have piggybacked on the gaming licence of one of the existing concessionaires, via a so-called service agreement.
In future, any management contract related to a gaming venue will need to be approved by the city’s incumbent chief executive.
The management company will only be allowed to receive “management fees” for any services rendered to the gaming concessionaire. Any form of commission or profit participation will not be permitted, the draft bill says.
Satellite gaming venues will be given a three-year grace period to tie control of their premises to a property controlled by a gaming concessionaire, after the new law comes into effect.
Macau has also proposed in its draft gaming bill a formal cap on the number of casino tables and gaming machines in the local casino market, and a minimum annual target of casino gross gaming revenue (GGR) that the city’s six operators will have to meet.
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