The Legislative Assembly (AL) yesterday passed a government-initiated law to reshape the city’s gaming industry, which will take effect after its promulgation in the Official Gazette (BO) in due course.
Officially, the long-awaited piece of legislation is known as “Legal Framework for the Operations of Casino Games of Chance”.
The two-and-a-half-hour plenary session in the legislature’s hemicycle yesterday was not open to the public due to the current COVID-19 outbreak, and only the media was allowed to sit in on yesterday’s meeting.
Secretary for Economy and Finance Lei Wai Nong and other government officials answered questions from the lawmakers during yesterday’s final debate of and vote on the new gaming law.
Over the past five months, the legislature’s second standing committee had been reviewing the gaming amendment bill article-by-article, the original version of which had been in force since 2002.
The law was passed just in time before the expiry of the city’s three gaming concessions and three sub-concessions on Sunday, June 26.
According to the law, a financial incentive will be offered to casinos for attracting more overseas gamblers by reducing their 5 percent levy (officially known as “contribution”) on their gross gaming revenues for social welfare and urban development in Macau.
In the original law, the levy stood at 4 percent of gross gaming revenues.
However, the government’s direct gaming tax rate of 35 percent on gaming operators’ gross gaming revenues remains intact.
Lei said he hopes this would create incentives for the gaming operators to come up with strategies to attract overseas gamblers, which he said the government believed would yield long term benefits, as it would turn Macau into a world tourism and leisure centre. He said that this could be achieved by reducing the 5 percent levy which, in turn, could enable the gaming operators to earn more income subject to the 35 percent special gaming tax rate by attracting more overseas visitors.
Currently, apart from the 35 percent direct gaming tax rate, the operators pay five percent of their gross gaming revenues into the public coffers as an additional levy for social, cultural and other public causes, including two percent earmarked for the public Macau Foundation (FM).
Lawmaker-cum-current affairs commentator Ron Lam U Tou argued that giving financial incentives to the gaming concessions was not the way to guarantee more overseas gamblers, while some other lawmakers worried this would lead to a decrease in casino operators’ payments to the Social Security Fund (FSS). Therefore, Lam requested a separate vote on the article regarding the incentives to be offered to casinos, which was eventually passed with 31 votes in favour and only Lam against.
Lei said that the exact percentage of the incentives will be considered based on the government’s estimate of the casinos’ future gross gaming revenues, with further details to be specified by the relevant administrative regulations.
Lei underlined that the pandemic has affected local communities over the past two years, but nevertheless the government has not cut the budget for the Social Security Fund. Therefore, he pledged that the government will ensure that the reserves will always be sufficient for the fund.
Sub-concessions become history
The new gaming law bans sub-concessions, meaning that future gaming concessionaires will not be able to sell sub-concessions. According to the new law, the government can grant up to six gaming concessions. The old law had capped the number of concessionaires at three. It did not specifically mention the possibility of granting sub-concessions.
According to the new law, the up to six gaming concessions to be granted by the government will have a validity of 10 years, with a possible extension of up to three years in exceptional circumstances, as the old gaming law, enacted in 2001, allowed gaming concessions to be valid for 20 years, with a possible extension to up to 25 years.
Currently, Macau’s gaming industry comprises three concessions (SJM, Galaxy and Wynn) and three sub-concessions (Sands, Melco and MGM). The three concessionaires sold one sub-concession each.
All the six operators have said that they will submit bids for new concessions.
The future gaming concessions will be the winners of a bidding process that has not yet been launched. The six gaming operators have asked the government to extend their concessions and sub-concessions until the end of the year, for which they are required to pay a 47 million pataca premium. The government has indicated that it plans to extend the concessions and sub-concessions until the end of the year.
Many of the city’s casinos owned by the gaming concessionaires or sub-concessionaires are housed on premises that they don’t own and are run by third parties, such as junket operators. They are informally known as “satellite casinos”.
While it was originally proposed in the amendment bill that the so-called “satellite casinos” must be housed in buildings owned by the gaming concessionaires, “management companies” are now allowed to continue the operation on behalf of the respective gaming concessionaires or sub-concessionaires, even though they do not have to own the real estate in which they are located, provided that their owners are among the winners of the upcoming bidding process.
According to the new law, the management companies will no longer be allowed to share the revenues of the “satellite casinos” with the respective gaming operators. Instead, the latter will pay the former a management fee.
Employees issues
According to local media reports, the number of “satellite casinos” owned by gaming operators but run by third parties – junkets in particular – ranged between 18 and 22 until a few weeks ago. Some of them have meanwhile closed for good.
Lawmakers asked the government yesterday to take measures to protect the labour rights of the staff working for the “satellite casinos”.
Lei said that the gaming concessionaires and sub-concessionaires should assign the affected staff to work directly for them, adding that they must comply with the Macau labour law fundamentals when dealing with the staff of the “satellite casinos”, adding that employment is Macau residents’ greatest livelihood.
Lei noted that the Labour Affairs Bureau (DSAL) will carry out job matching for the affected employees, and stressed that those working for “satellite casinos”, including dealers and table game supervisors employed by gaming concessionaires who have the legal responsibility to ensure the protection of their employment.
Regulating junkets
Under the new gaming law, each junket, officially known as licenced gaming promoter, can work for only one gaming concessionaire, and only in the form of a company, in exchange for a “commission” from the gaming concessionaires, i.e., they will no longer be allowed a share in the concessionaires’ revenues.
Some lawmakers said they were concerned that this could limit the development of the junket sector. Lei said that the aim of the new law was to clarify the role of gaming promoters as partners of the gaming concessionaires providing convenience for transport, hotel accommodation, dining, and entertainment services to customers, as well as to prevent the junkets from expanding the scope of their business “without limit”.
Lei added that the further details of the junket regulation will be laid out in the future junket law.
Gaming Inspection and Coordination Bureau (DICJ) Director Adriano Marques Ho said the aim of the new law was to better monitor the so-called VIP rooms of the “satellite casinos” which were not adequately regulated in the past, in order to promote the healthy development of the gaming industry.
Lawmakers have said they expect the future junket law be passed as soon as possible so that the government’s gaming concession bidding process can get off the ground before long.
The government has still to announce its timeframe for the bidding process.
Secretary for Economy and Finance Lei Wai Nong answers questions from lawmakers about the government’s new gaming law during yesterday’s plenary session in the legislature’s hemicycle.
Photo: Ginnie Liang
