Macau’s Legislative Assembly has published the draft of the world’s largest gaming hub’s new gaming bill. Shared on Tuesday, the 44-page draft document details officials’ plans of tightening casino control over casino firms and the controversial junket market. It marks the biggest reform in two decades for the Chinese enclave.
The document has been published in both Chinese and Portuguese, reports Reuters. It sheds light on the situation of current licensees: as the government previously announced, new licenses will be capped at six, with license terms halved to 10 years. The permits of the current six operators are all due to expire in June.
But in addition to reaffirming officials’ intentions of maintaining six operators, the draft bill provides clarity on the role of the junket operators, which bring high-rollers from mainland China by arranging transportation, accommodation and credit to gamble.
The enclave heavily relied on this market, which proved highly profitable: operators included rooms to cater to VIPs, which mostly closed during the last weeks amid an ongoing crackdown. Outflows of gambling-related funds into Macau were described as a “national security risk” by the government last year, leading to mainland China seeking to terminate the market.
If approved, the new bill states casino operators would no longer be able to have dedicated junket rooms. Moreover, revenue-sharing arrangements between the two parties would be prohibited. Macau will continue to issue junket licenses to approved VIP promoters, but will restrict them to only operating in one concessionaire, adds Reuters. They were previously allowed to operate in all operators, with multiple rooms.
Plans to increase control over the casino industry are also detailed in the bill draft under a plan to make casinos face a review every three years, in which the Macau gaming regulator will examine contractual compliance. Moreover, each license holder will have a 30% cap on the number of shares that can be publicly listed, and major financial transactions must first be communicated to authorities.
The government also details rights to terminate contracts for a number of reasons, including “public interest” or breaching obligations. Operators will also have to draw up plans to promote responsible gaming, and a cap to gaming tables and machines per license holder is to be introduced.
The draft further lists actions “expected” of new licensees, including support for local and medium-sized companies, activities of “public interest,” and support for fields including science and the environment, adds the previously cited source.
While the initial announcement of the gaming bill, on Friday, led shares of Macau’s casino operators to significantly rise, as investors felt confident that the number of casino licenses would be maintained at the current six, shares have now slightly dropped on Tuesday.
Casino stocks in Macau had surged following Friday’s announcement of the new legislation in the Chinese enclave. A Bloomberg Intelligence gauge of casino shares jumped as much as 12% on Monday, the most in more than six years. Wynn Macau, Sands China and Galaxy Entertainment Group each posted double-digit gains.
The favorable news came after Macau officials announced on Friday that casino licenses in the world’s largest gambling hub would remain at the current six license cap, with a possibility to be stretched by another three years.
The decision comes as the six current casino licensees approach the expiration of their current permits, set to cease in June. The government also decided not to go forward with a plan to directly supervise the casinos in the new legislation after feedback from the operators.
Sands Macau.
The changes to Macau’s gaming law had been described as agreeable and gentler than initially expected. Operators feared some of the most unpopular proposals, in particular the appointment of government representatives to supervise operations, would be included in the legislation.
Moreover, the Macau government announced no current plans to increase the level of taxes on the industry, while current licenses will stay in place until the new law is implemented. This has further eased investor concerns about what the new legislation would imply, leading to stocks surging in response.
On Friday, US-listed stocks also experienced a similar climb, further reports Bloomberg, after Macau paved the way for all current operators to seek a renewal for their permits. The revisions remove most key concerns experienced by investors, and may lead to a “significant revaluation of the sector,” according to Citigroup analysts.
The newly-announced license conditions took into account input from a consultation period launched in September 2021, aimed at reviewing and changing rules for the casino market. Respondents showed support for plans to keep the number of operators allowed in the market at the current total of six, while halving the duration of the licenses.
The new legislation also mandates casino operators to increase the amount of capital to 5 billion patacas ($623.67 million) from 200 million patacas, and increase the requirement for a Macau-based director of the company to hold 15% from 10%.
Moreover, officials have committed to cap public floats at 30%, which Ku Mei Leng, Chief of Macau’s Office of the Secretary for Economy and Finance, said would “improve supervision” of the gaming industry. The cap to public floats was not originally included in the gaming review proposal.
Investors initially feared stronger measures to increase Chinese control over the sector. The new gaming bill has already been sent to the local legislature, where it is expected to pass, given most government proposals are greenlighted by Macau officials.
The news comes as Macau posted $10.9 billion in gaming revenue last year, up 44% from 2020, but still down 70% from pre-pandemic levels amidst China’s harsh zero-tolerance policy for coronavirus cases.
Linda Chen, Vice Chairman and Executive Director of Wynn Macau.
While pandemic restrictions and the junket market clampdown are expected to heavily impact the industry, making its future performance hard to predict, Linda Chen, Vice Chairman and Executive Director of Wynn Macau, said earlier this month she is confident Macau will achieve the government-estimated gross gambling revenue of MOP100 billion ($12.4 billion) this year.
Operators now feel confident of being relicensed for their casino operations, while tourist arrival counts on the first days of the new year have been described as a solid starting point. Should the pandemic situation remain stable in the city, experts believe the tourism outlook for the year could be positive.
Original article: https://www.yogonet.com/international/news/2022/01/18/60973-macau-to-limit-junket-market-and-review-casinos-every-three-years-in-unveiled-gaming-bill
