Macau gambling reforms approved, casinos face tougher controls

Posted on: June 21, 2022, 11:00 a.m.

Last update: June 21, 2022, 12:52 p.m.

Macau lawmakers have approved sweeping changes to the enclave’s gambling law, ushering in the first major reforms to its casino market since liberalization in 2002.

Gambling reforms in Macau
Macau’s Fortuna Hotel is currently on lockdown with up to 700 guests inside after an outbreak of COVID-19 at the casino. (Image: Macau News)

The new legislation will grant the Macau government greater oversight and regulatory control over its gambling industry.

The six casino licenses will remain. But their duration will be halved, from 20 years to ten years, with a three-year maximum extension at the discretion of the government.

License holders will be reviewed every three years by Macau’s gaming regulator, the Gaming Inspection and Coordination Bureau. The government will have the right to terminate a gaming license for reasons that include the vague term “public interest”.

“Healthy Development”

The reforms coincide with the first license renewal in Macao’s history. Prior to 2002, its gambling industry was monopolized by the late casino magnate Stanley Ho and his business empire, SJM Holdings, which remains a major player in the market.

The decision to open the market to international operators in 2002 turned Macau into the biggest gambling hub in the world.

The six licenses were due to expire on June 26. But the government has asked operators to apply to extend them until the end of the year, as it prepares to launch a new public tender.

Macau Administration and Justice Secretary Cheong Weng-chon told a press conference last October that reforms were underway to “promote the healthy development of the gaming industry in Macau. , improve the regulation of the industry and prevent the possible negative effects of gambling”. ”

Beijing Pressure

Macau has faced pressure from Beijing to diversify its entertainment offerings and attract visitors from outside mainland China. There, gambling is illegal and anathema to the Chinese Communist Party. Beijing has accused Macau casinos of facilitating capital flight and money laundering.

The reforms raise the tax rate on gross gaming revenue (GGR) from 39% to 40%. But they offer generous tax breaks to operators able to attract visitors from foreign countries.

Other changes include a requirement that operators must have more permanent residents on their casino boards, and a formal cap on the number of tables and gaming machines at each site was introduced. The city’s six licensees will also be required to achieve a minimum annual GGR goal.

Health officials in Macau are now carrying out mass COVID-19 testing of its 600,000 residents following a spike in cases over the past few days. On Tuesday, Hotel Fortuna was closed, with up to 700 guests inside, following an outbreak.

Macau, like Beijing, is implementing a “zero-COVID” policy, which has severely hampered its economic recovery from the pandemic.

James V. Hayes