Key regulatory issues on casino gaming to be addressed by the Macau authorities include clarification of the legal status of so-called “collaborators” or sub-agents that work with the city’s licensed VIP gaming promoters, the latter group also known as junkets, suggests local gaming scholar Ryan Ho Hong Wai. The collaborators are not themselves currently licensed by the Macau gaming regulator.
In an interview with GGRAsia, Mr Ho – a lecturer in gaming studies at Macao Polytechic Institute – also mentioned that there was not yet an authoritative interpretation regarding the applicability to Macau of mainland China’s newly-instituted rules criminalising assistance of so-called “cross-border gambling”.
Macau’s gaming regulator should present a “clear legal definition” of gaming collaborators, suggested the scholar. The term “gaming collaborator” is usually a reference locally to sub-agents that work with the licensed VIP gambling promoters to bring in high-value players to the Macau market.
Mr Ho mentioned the desirability of clarity on sub-agents in an article titled “Macao junket business: some regulatory issues”, which was recently published in the second edition of Macao Polytechnic Institute’s journal “Global Gaming and Tourism Research”. The gathering of information for that paper took place in the first half of 2020, Mr Ho noted to GGRAsia.
The role of the sub-agents, mostly people from mainland China, was “in essence” the same as their partnering junkets as they help organise gaming patrons from mainland or abroad to gamble in Macau, Mr Ho had stated in his paper.
Sub-agents a ‘blank page’
Such partners were however a “blank” page in the current local regulatory framework, as they do not need to undergo the same licensing process as their partner junket operators do, the scholar had noted.
Mr Ho also mentioned a current lack of legal clarity regarding the occupational status and tax liability of such gaming collaborators, people who mostly do not hold Macau ID. He suggested that while they may be acknowledged by the local gaming regulator for providing some forms of professional service, their occupational status was not legally recognised by other Macau government departments.
For now, it was “difficult” to draw any legal implication from China’s criminal code changes, in terms of how or whether they might affect the status or regulation of gaming collaborators in Macau, Mr Ho remarked to GGRAsia. Mainland China put into effect on March 1 the new rules on what the central authorities called “cross-border gambling”.
Mr Ho stated: “There is still a lack of clarity on whether Macau is included in the so-called ‘outside-the-borders’ definition.”
“Now, it is important for the relevant regulatory units to come forward and clarify the applicability of these legal changes, so that gaming companies would have official guidance for making their promotion and marketing work, all legally compliant,” Mr Ho added.
China’s new criminal-code changes might have the potential to affect the Macau government’s regulation of junket operations and even the blueprint for the Macau gaming industry at large, Mr Ho remarked to GGRAsia.
The Macau authorities had already said they intended this year to introduce changes to regulations applicable to junkets. The topic was mentioned in the government’s Policy Address for the Fiscal Year 2021, published in November.
Junket regulation update
The Macau government should introduce more “concrete and rigorous” standards for reviewing the suitability of VIP gaming promoters, and reinforce “investigation measures” regarding such individuals’ respective backgrounds and capital sources, Mr Ho suggested in his research paper.
The definition of “key employees” at VIP gaming promoters should also be clarified, so that all management personnel engaged in junket business within a junket brand, are all subject to Macau-government regulation, the gaming scholar wrote.
Mr Ho also suggested in his article that a “tiered system” should be introduced regarding financial-strength requirements for any registered junket. That could correspond respectively to their “scale of operation”, their “dead-chip sales” or their rolling chip volume, as well as their “operational risk”.
In future, any newly-registered junkets should also be required to lodge a higher capital guarantee with the government, as the the current level is only MOP100,000 (US$12,500), set in 2004, and is nowadays “completely disproportionate” to the business volume of local junkets, Mr Ho wrote.
“As an important component to Macau’s gaming industry, the workings of VIP rooms lack transparency… but to completely ban the practice of VIP rooms is not fitting the overall interests of the gaming industry,” Mr Ho remarked in his research paper.
The scholar noted that the city’s VIP gaming room system had never received any formal recognition under Macau’s existing gaming legal framework. That regulatory issue should be resolved.
“To strengthen the financial soundness of a VIP room, the authorities should… require that the operation capital of the VIP room be maintained at a certain ratio,” Mr Ho wrote. He added that the Macau government should require the adoption of international-standard accounting and audit systems for local operators of junkets.
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