Macau Would Benefit From iGaming Regulation

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Thursday, October 20th, 2016 | Written by Shane Larson

Despite posting moderate gains in both August and September, Macau’s gambling industry is still reeling following its 26 month losing streak of shrinking revenues. The problem first started in 2014 after the Chinese government launched its anti-corruption campaign, after which Macau’s casinos were compelled to monitor more closely the spending habits of the VIP clientele who provided them with more than half of their gross gaming revenue. Between imprisonments and the general fear of being targeted by the government, Chinese VIPs subsequently fled Macau, with their absence badly affecting the casinos’ bottom line.

Diversification a Political Priority

Prior to the country’s major policy shift in 2014, casino gambling had been the backbone of Macau’s economy, with China’s only legal gambling destination focusing on the sector to the detriment of other major potential sources of revenues. In the wake of the government induced fall in revenues, however, many in Macau are now looking beyond gaming and have started to diversify into other areas. This has led to a focus on Macau becoming more of a general tourist destination, and commenting on its shift in priorities, Union Gaming chief analyst Grant Govertson, explained:

“Between the wealth generation in China, the infrastructure being developed to move people around, and the resort supply being built in Macau and neighboring Hengqin Island, all the pieces are being put in place for Macau to eventually take the entertainment crown away from Las Vegas over a very long period of time.”

An Expansion into Online Gambling?

One law firm in Macau, however, is speaking out and advising the island to expand gaming in a new way in order to save its economy. According to the law practice of Rato, Ling, Lei and Cortés, Macau needs to seriously consider introducing iGaming legislation that would attract online casinos to the territory.

Those familiar with gaming regulations in Macau may find themselves scratching their heads at that statement, as there has already been some iGaming licenses issued on the island. The Macau Jockey Club horse-racing facility, the Macao Yat Yuen greyhound racing facility and the Macau Slot sports betting facility, for instance, are currently accepting bets online; nevertheless, there is no law in place that allows any other operators to apply for iGaming licenses.

Furthermore, it seems that Macau may not be interested in renewing those licenses for much longer. Macau Slot has applied to have its license extended beyond their current expiration dates of 2020 and 2022, but so far it does not seem that the territory is eager to grant this request.

Broader Paradigm Shift Needed

A representative of Rato, Ling, Lei and Cortés explained in an interview with GGRAsia that online gambling could only be of benefit to Macau. He and the other partners of his law firm believe that online gambling would help to keep those casinos currently struggling to stay afloat, and that it would send a message to the world that Macau is still a gambling friendly area.

The option would no doubt be helpful for Macau casinos as currently Chinese business people who can afford to gamble are taking vacations in Australia, and other parts of the world for fear of being placed under close scrutiny in Macau’s casinos. Even if online gambling did not provide a major source of revenue for the casinos, the notion that Macau is promoting online play could at the very least make some VIPs less wary of heading to the resort’s gambling tables.

Foreign Casino Practices Under Scrutiny

As mentioned, Australia was one of the major beneficiaries of Macau’s clampdown on VIP casino gambling, as high rollers headed to the Crown Casino and other venues to gamble. While in China its casinos are not directly permitted to market the gambling aspect of their properties, the same rule also applies to foreign companies trading in Macau.

Recently, though, Crown Resorts Limited employees working in Macau were found to have been luring VIP gamblers to their company’s overseas casinos by offering them attractive incentives, including free travel, accommodation, as well as other perks. Last week, 18 of the company’s employees were subsequently arrested for “gambling crimes” and are currently facing the prospect of up to 16 months behind bars. As well as a blow to its reputation, Crown Casino has now revised its earning prospects going forward, with a company statement explaining:

“As a result, we have lowered our near-term VIP growth outlook for Crown and now forecast an 8 per cent year-on-year decline in VIP revenue 2017, from a previous forecast of a 3.5 per cent increase.”