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Update on casino licence refreshment this year: DICJ

May 16, 2018 Newsdesk G2E Asia 2018, Latest News, Macau  


Update on casino licence refreshment this year: DICJ

The head of Macau’s casino regulator reiterated on Wednesday that the city’s government plans to disclose details on the eventual refreshment of the existing gaming concessions later this year.

“We are doing a lot of preparatory work,” Paulo Martins Chan (pictured), director of Macau’s Gaming Inspection and Coordination Bureau – also known by its Portuguese acronym DICJ – told reporters on Wednesday. “But it is not yet the time to make an announcement.”

He added: “The chief executive [of the Macau government] has said previously that there would be some updates on this matter still within this year. I think the chief executive will in the future make that announcement.”

In November last year, Macau’s Chief Executive, Fernando Chui Sai On, said that mid-2018 would be an “appropriate” time to provide more details regarding any extension of gaming rights for Macau’s current gaming concessions.

On Wednesday, Mr Chan did not disclose whether the Macau government was considering lowering the current tax rate on gross gaming revenue (GGR), one of the highest in the Asia-Pacific region, as part of the casino licence renewal process. “We are studying several possibilities,” he said.

On Tuesday, the chairman and chief executive of Melco Resorts and Entertainment Ltd, Lawrence Ho Yau Lung, had suggested the Macau government should be prepared to revisit the issue of Macau’s 39-percent gaming tax – “the highest in the region” – in light of what he said was strong regional competition from lower-tax jurisdictions targeting the same customer base, the mainland Chinese gamblers. Francis Lui Yiu Tung, deputy chairman of rival casino firm Galaxy Entertainment Group Ltd, made a similar call last year.

The comments by DICJ’s Mr Chan were made on Wednesday on the sidelines of Global Gaming Expo (G2E) Asia 2018, a three-day trade exhibition and conference taking place in Macau until Thursday. He delivered a keynote speech at the event.

The concessions of the six current Macau operators expire on various dates in either 2020 or 2022, with the respective licences of SJM Holdings Ltd and MGM China Holdings Ltd set to expire in 2020.

The Macau government has commissioned two studies – to be completed by the third quarter of 2018 – on the possible development of the city’s gaming sector in the period between 2020 and 2030. One topic for consideration is how many gaming licences should be allowed in the market in the aftermath of the expiry of the current rights.

A number of Macau casino industry executives and investors have been requesting more information from the Macau authorities regarding the eventual refreshment of the existing gaming concessions.

Macau’s gaming law states that the licences of the existing holders can be extended for a maximum of up to five years from their original expiry dates. But once a gaming concession contract expires, any new concession would have to be granted via a public tender. In that sense, say gaming lawyers familiar with the matter, there is no such thing in the Macau context as a “concession renewal”.

Regulation revamp

In his Wednesday comments to media, Mr Chan confirmed DICJ was currently working on revising several regulations covering Macau’s gaming industry. That included introducing amendments to the regime for the supply of gaming machines, equipment and systems, and amendments to the legal framework overseeing junket activities in Macau. In both cases, Mr Chan said, the regulator had already conducted a consultation process with the respective industry participants on the proposed changes; it was now assessing the opinions collected based on “public interest”.

“We have several regulatory proposals lined up for approval,” Mr Chan said. He added that the regulator’s priority was to revise the rules on access to casino floors. DICJ is proposing the introduction of regulations banning Macau-based gaming workers from casino floors outside work hours. It says the move aims to curb problem gambling among casino employees, particularly card dealers.

Local players’ contribution to Macau casino GGR is estimated by investment analysts as being small when judged in percentage terms.

Mr Chan said a proposal on the matter should be sent “very soon” to the city’s Legislative Assembly for voting.

In his Wednesday comments, the official reaffirmed that DICJ had been in close contact with the management of Wynn Macau Ltd regarding the shareholding changes in that firm’s parent company Wynn Resorts Ltd – including the sale to Macau rival firm Galaxy Entertainment of a 4.9-percent stake in the parent firm. Mr Chan again stated that no wrongdoing had been detected regarding the entire process.

Questioned about the potential allocation by DICJ of new-to-market gaming tables for Morpheus – the latest addition to Melco Resorts’ City of Dreams Macau casino resort, to open on June 15 – Mr Chan remained tight-lipped, just stating the process would be compliant with Macau’s table cap policy. The policy, effective since 2013, limits compound annual growth in the number of new live-dealer tables in the city’s casinos to 3 percent until the end of 2022, from a base of 5,485 tables recorded at the end of the fourth quarter of 2012.

Mr Chan also reiterated that the casino regulator had never authorised gaming products in the local market making use of cryptocurrency. He added that DICJ had no plans to allow usage of cryptocurrency in the city’s gaming sector.

The official additionally said that DICJ had yet to receive any request from one of the city’s six casino operators to operate a gaming facility at The 13 Hotel on the border between Cotai and Coloane in Macau.

The firm promoting the project has revised the opening date for the hotel component to June 30, according to a March filing. Several previous deadlines declared by firm have already been missed.

The project is also said to include a casino. The casino at The 13 Hotel may only open by March 31, 2019, along with some shops at the complex, the promoter said in February.


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