GGRAsia – Macau law firm urges rethink re online gaming regulation

Macau law firm urges rethink re online gaming regulation

Sep 29, 2016 Newsdesk Latest News, Macau, Top of the deck

An influential Macau law firm has suggested that the city’s government should reconsider the issue of regulating forms of online-delivered gaming not anticipated by Macau’s current framework of gaming rules. Opening the Macau market to remote gaming activities “could breathe new life into this once-booming market,” said lawyers Pedro Cortés and Manuel Moita Júnior, from local law practice Rato, Ling, Lei and Cortés.

The substance of their argument was set out in a paper published by the International Law Office, a newsletter service for the legal profession.

The diversification of Macau’s economy away from gambling-focused tourism – something considered a political priority by the territory’s government in the wake of mainland China’s anti-corruption and anti-extravagance campaign – “will necessarily imply the diversification of the gaming sector itself,” Mr Cortés told GGRAsia in separate comments.

“It is clear that no licences are available to enable operators to offer remote gambling services in Macau, even though authorisations have been granted for the Macau Jockey Club (horse racing), Macao Yat Yuen (greyhound racing) and Macau Slot (sports betting) to accept online bets – which are presently the only legal options for online gaming in Macau,” wrote the lawyers in their paper.

They added: “It is generally known that legislation was prepared to regulate online gaming a few years ago, but it was never submitted to the Legislative Assembly.”

In late May, Macau’s Official Gazette said Macau Slot Co Ltd was to have its sports gambling concession – which includes football and basketball betting – extended to June 5, 2021. The current Macau casino concessions and sub-concessions expire on various dates between 2020 and 2022.

Macau Slot – part of the business empire built by Stanley Ho Hung Sun, founder of Macau casino operator SJM Holdings Ltd – has a monopoly on sports betting in Macau. The exception is betting on horseracing, where the concession is held by Macau Horse Racing Co Ltd, which runs Macau Jockey Club – also part of Mr Ho’s business interests.

Breath of fresh air

Mr Cortés – who has previously represented gaming industry firms in litigation conducted via the Macau courts – told GGRAsia in an email: “The first move towards a more diverse [local] economy may be made by creating the necessary conditions for the opening of the gaming market to the online segment, which would not only bring some fresh air to the local gaming industry but also pave the way to a broader paradigm shift Macau needs to make.”

He added: “Sooner or later, both local and central government will take notice of the plethora of opportunities opened up by that indisputable reality, as well as the huge potential of a legal, regulated online gaming market for the local economy, not to mention the additional source of tax revenue for the government.”

The lawyer clarified that he was not talking about Macau becoming a licensor or host for cross-border online gaming services; which some nation states deem illegal in their territory or try to block. The Philippines is the main Asian country currently offering jurisdictional licensing for such cross-border services.

Mr Cortés stated: “The reference to ‘remote gambling’, by contrast with land-based games of fortune and chance, is only made to highlight the possibility of online games being legally offered in Macau once a concession or any other legal regime (licence) is granted.”

A number of industry commentators have suggested the potential for online-delivered sports betting in Macau – similar to products available in Las Vegas casinos – is currently largely untapped.

Macau Slot’s business sector generated gross revenue of MOP673 million (US$84 million) in 2015, down by 8.6 percent year-on-year, show data from the local gaming regulator, the Gaming Inspection and Coordination Bureau.

The Macau Jockey Club last made a profit in 2004, and by the end of last year it had accumulated losses of approximately MOP3.96 billion.

In July, Macau’s gaming regulator ordered Macao (Yut Yuen) Canidrome Co Ltd – also part of Mr Ho’s business empire, and which has seen dwindling attendance and revenues for its greyhound race meetings – to relocate its track within two years or shut down operations.

A recent report by U.K.-based consultancy firm Juniper Research estimated that the value of online gambling wagers will grow from about US$550 billion this year to nearly US$950 billion by 2021. Juniper – a firm that specialises in appraising new high-growth digital business markets – suggested that users of mobile devices and channels would be responsible for the “majority of net growth” in online gaming activities.