Macau’s gaming law needs to be amended in order to account for the possibility of having more than six gaming licensees, the current number, after the present arrangements expire in either 2020 or 2022, several gaming lawyers and scholars told GGRAsia. There is also a need to put an end to the “sub-concession” regime used presently, several remarked.
Even if Macau chose to continue with a six-operator system, it would still be mandatory for the current statute covering gaming concessions – namely the Macau Gaming Law (Law 16/2001) – to be amended, as that originally envisaged only three concessions, noted Macau-based gaming lawyers Bruno Beato Ascenção and Sérgio de Almeida Correia.
Three of the current six operators in the market – namely Sands China Ltd, MGM China Holdings Ltd and Melco Resorts and Entertainment Ltd –were allowed in via a piece of legal improvisation. They actually run Macau gaming via locally-incorporated companies that are technically sub-concessions spun off from the Macau rights, respectively, of local units of Galaxy Entertainment Group Ltd, SJM Holdings Ltd and Wynn Macau Ltd.
“If you look at the current market, there are many gaming operators that may have the possibility of becoming gaming concessionaires. For instance, when you take into consideration the importance of a junket such as Suncity [Group], you can easily predict that they will do everything they can to obtain a gaming licence,” Mr Ascenção remarked to GGRAsia.
Suncity Group’s investment in the multibillion-U.S.-dollar integrated casino resort project Hoiana in Vietnam could put it in a “better position” to win a Macau gaming licence in the event the Macau government was minded to allow a seventh operator in its market, brokerage Union Gaming Securities Asia Ltd wrote in a February note.
Mr Correia told us: “The current [gaming] law needs to be amended in order to accommodate at least six concessionaires, and/or eventually to extend the number to seven or eight, and this should be done during the present legislature [’s term].”
He added: “The current chief executive should prepare the process for the next chief executive to have the necessary instruments to take the most convenient decision in the interests of the Macau Special Administrative Region.” The end of the second and final five-year term of the incumbent Macau chief executive, Fernando Chui Sai On, falls on December 2019.
The two lawyers and Macau-based gaming scholar Wang Changbin share the view that the concession holder firms of Macau operators SJM Holdings and MGM China will see their current concession extended by two more years, until 2022 – so that the two firms will be on the same finishing line for their rights as the other four licensees.
Mr Ascenção said: “There are many scenarios that can arise. You can imagine that [the government is] going to start a new tender process for all current gaming operators, namely changing the law in order to better reflect the current status quo of the gaming industry in Macau… that means ending this concept of sub-concessions.
“…the legal concept of a sub-concession is that it is intrinsically linked to the gaming concession, therefore it is not autonomous; although we’ve seen in the past some documents issued by the Macau government declaring that the sub-concession – namely the [Sands China] sub-concession – was independent from the Galaxy concession, which legally doesn’t make any sense,” Mr Ascenção explained.
“Another thing that is extremely important to see is if all these [incumbent] companies need to go through a tender process again, or just leave this process to new [-to-market] gaming operators…so that you have a dual form of granting a concession: the government would renew those that already have one, and make new gaming operators to go through the tender process,” the lawyer added.
To fellow lawyer Mr Correia, the format of gaming sub-concessions should end as it presents “no advantages” to the local community.
“Personally I don’t see any advantage in sub-concessions since the negotiation is carried between concessionaire and sub-concessionaire privately, and there is no gain to Macau. The same applies to satellite casino/investors,” he noted, referring latterly to a legacy system started in the days of the 40-year gaming monopoly of Stanley Ho Hung Sun, whereby third-party investors have been able to run a casino hotel in the city by piggybacking on a local gaming licensee’s rights and gaming table allocation via a so-called service agreement.
“All this needs to be accommodated within the law,” Mr Correia remarked to us. “It is not acceptable to have people without gaming licences saying that they own casinos.”
Ambrose So Shu Fai, chief executive at SJM Holdings Ltd, mentioned to local media early in June that the firm would like to “contain the number of satellite casinos” which operate using its gaming rights via service agreements. Among the six gaming concessionaires, SJM Holdings has the largest share of such satellite casinos.
Wang Changbin, director of the Gaming Teaching and Research Centre at Macao Polytechnic Institute, told GGRAsia: “There may have been certain requirements the government has imposed on them [satellite casino operators], but in law we don’t see what these requirements are. So it poses a regulatory problem… there should be a scenario where these satellite operators can be a concession contender. If this direction is not adopted, at least in the law the government should specify its regulatory framework for satellite operators, and their respective owners.”
Lawyer Mr Correia reckons that the legal status of gaming sub-concessions and satellite casino operations should be rectified, so that those wishing to pursue such activity would be able to seek recognition as a concessionaire by competing in a public tender to gain that status.
“If it is the interest of the Macau government to keep those individuals/companies in the gaming market, then the [aggregate] number of licences must be increased and all those [operators of such venues] should be allowed to participate in future tenders in order to get a licence… but first the Macau government needs to clarify how many licences it is willing to give,” Mr Correia remarked to us.
The Macau government has not so far publicly commented on the topic of the number of concessions that might be permitted post 2020 and 2022. It could nonetheless consider imposing certain obligations that the existing gaming brands in the market and new contenders for a concession process should answer to, remarked Jorge Godinho, a visiting professor at University of Macau where he teaches gaming law and anti-money laundering law.
“Cotai obviously has no more room for several new concessions with building obligations [attached]. Only Lots 7 and 8 are still available,”Mr Godinho remarked to us. Notwithstanding that fact, those plots represented “a vast piece of land, located in a very central area” of Cotai, just next to the Sands Cotai Central casino resort, and across the street from Studio City, he noted.
“I suggest that this land should be dealt with in an innovative and creative manner, by organising a tender to build one of the greatest integrated resorts the world has ever seen, if not the best. The tender would be open to the existing concessionaires as well as potential new operators from outside. Macau should have an iconic tourist attraction in the middle of Cotai, and Lots 7 and 8 present this opportunity,” the scholar added.
Apr 19, 2021Australian casino operator Crown Resorts Ltd said on Monday it had received a circa AUD3.0-billion (US$2.31-billion) proposal by private equity firm Oaktree Capital Management LP to buy the...
Apr 16, 2021
Apr 16, 2021
Macau’s total VIP gross gaming revenue in the first quarter of 2021