Macau’s New Gaming Law: The Biggest Reform in 2 Decades

Macau, the world’s largest gaming enclave by revenue, is readying itself for the first significant gambling legislation revamp in over two decades. The highly anticipated changes have received resounding applause and categorical criticism in equal measure. That being said, it has been clear for some time now that the Macau gambling laws needed some sort of revision to reflect the modern gaming industry landscape.

When most gambling-legal regions were drafting their gaming industry laws in the 90s and early 2000s, wildly popular iGaming platforms like VulkanVegas had not entered the scene. At the time, iGaming was still in its infancy stages, and no one would have accurately predicted how much the sector could change in the next 10 or 20 years. This means that there might be regulatory loopholes that couldn’t have been foreseen back then.

It’s no wonder why many nations and jurisdictions worldwide are working on updating their gaming industry regulations to match the present times. The UK is also currently working to overhaul its gambling laws, whereas the US marked its most notable regulatory milestone when the PASPA was repealed in March 2018. Back to the Chinese Special Administrative Region (SAR), here’s a highlight of the reforms that recently gained approval in the legislature:

Slight Increase in Gaming Taxes

The new legislation will increase annual gaming taxes from 39% to 40% of the gross gaming revenue. It’s worth pointing out that the 40% taxation structure combines 35% direct gaming base tax and 5% additional levies for social welfare and urban development. The 5% could, however, be reduced if an operator manages to attract more overseas players to its gaming establishment in Macau.

Starting on a Clean Slate

A maximum of 6 casino concessions will be issued following a fresh tendering process that will offer a clean slate for all stakeholders in the Macau gambling industry. The gaming concession has, however, been shortened to 10 years from the original 20 years for all the operators.

Moreover, should an operator need an extension, the Chief Executive could grant a three-year adjustment under special circumstances. Finally, in tandem with the spirit of starting afresh, a new system of penalties will be introduced for all the concessionaries.

More Power Handed to Macau Officials

The new Macau gambling law will hand greater powers to officials such that the Chief Executive, for example, will be allowed to terminate a concessionaire’s license for the following reasons:

  • Underperforming revenue
  • Jeopardizing the security of mainland China or the Macau SAR
  • Contract cancellations
  • Concession reclamations
  • Failure of a concessionaire to abide by its obligations.

Meanwhile, regarding revenue, Macau casinos will be required to have 5 billion patacas (about $618.43 million) in cash at all times during the entirety of their license tenure. As things stand, almost all Macau’s casinos (Wynn Macau, Sands China, MGM China, Galaxy Entertainment and Melco Resorts) have sufficient liquidity.

SJM Holdings is the only one that needs to beef up its finance to be sufficiently liquid. An additional tax will effectively be handed to a concessionaire for failing to meet the minimum gross revenue limit.

The Chief Executive has also been handed the power to specify the total number of gaming tables and slot machines in Macau. There will be some considerations the CE will have to make to determine that number. For instance, for specific license holders, the CE will have to evaluate the license holder’s operations, its overall investment in elements not related to gaming, or the impact this number could have on the Macau economy.

Responsible Gaming at the Core of Operations

It hasn’t been lost on the minds of many legislators just how brutal gambling can be when not carried out responsibly. Macau being one of the biggest gambling hubs in the world, has taken steps to address this critical gambling subject. The new gambling law requires casino operators to draw up extensive plans to promote responsible gaming on their premises.

A Push for a Lesser Reliance on Gambling

The Covid-19 pandemic hit the gambling sector hard, and Macau, being highly reliant on the sector, saw its economy come to its knees. With China’s zero Covid policy still being strictly followed, Beijing is pushing for the Portuguese colony to be less reliant on gambling.

Mainland China is urging its SAR to diversify its portfolio from merely gambling to tourism, technology or even finance. With concerns that the gambling industry is also a significant cause of capital outflow in the Vegas of the East, Beijing is employing stricter regulations on the industry.

All in all, while the regulatory overhaul has attracted criticism, particularly on powers bestowed to authorities, it remains to be seen how the vast majority in the gaming mecca will adapt to the changes. Until the new gaming laws are enacted, it is rather difficult to tell exactly how the SAR’s economic lifeblood will respond.

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