IAG 2006-06-07 Jun-Jul - page 14-15

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Macau currently lacks regulations covering its rapidlygrowinggam-
ingmachinemarket. According to Jorge Oliveira, theman charged
withdraftingMacau’s gaming laws, gamingmachine regulationwill
need to cover “who can sell, if youneed tobe licensed, if the equip-
mentneeds tobecertified.Whocan touch themachines.Thesekinds
of things.”
Themachinemanufacturers are also calling on theMacau gov-
ernment to allow them to share revenue with casinos on the ma-
chines they install. Mr. Oliveira feels this would distort the working
of themarket.
“Wewant themachines tocomebecause theoperatorsherewant
to invest inmachines. Casinosmay put machines inwithout invest-
mentbyofferingprofit share to themanufacturers.”
Mr.Oliveirawantsmore gamingmachines inMacau, and he be-
lieves thebestway toachieve that is to liberalise thegamingmachine
market to allowhotels andother non-Casino venues to install them.
He believes failing to liberalise themarket will lead tounder-invest-
ment and open the door to a significant threat toMacau.“Youmay
have very soon in Hong Kong the idea that they should start to le-
galise casinosby legalisingmachines.”Heargues itwouldbehard to
argue for theprotectionofMacau’sgamingmachinemarketbecause
thecitycurrentlyhas so fewmachines.
Regulating the Explosion
Butwhat of theview thatMacau casinooperatorswill in coming
years createvasthallsofgamingmachines,particularlyonCotai?
“Casino operators sell the idea that they are going to invest a
lot inmachines. But common sense dictates otherwise.Tablesmake
US$5,500 per day, and even if that falls to US$4,000,”will still offer
muchbetter returns forcasinos thanmachines,whichcurrentlymake
aroundUS$300perday.
“Sands is closing its restaurants toput inmore tables.WynnMa-
cau [set toopen inSeptember]will have20,000 sq.mof casino space.
And you know howmanymachines theywill have in 20,000 sq.m?
Threehundred something.Thosearealmost likeartificial plants.They
aredecorativeelements.”
Byseeking tomaintain theirexclusive right tooperategamingma-
chines,Mr.Oliveirabelievesthenewcasinooperatorswillonlystrength-
en thepositionofMelco InternationalDevelopment,which is themain
organisation inMacau currently investing inmachines. “Because the
groupwithwhich theyareassociated,STDM [parent companyofStan-
leyHo’sSJM],hasa lotofgamingflooravailable.STDM isthe largestreal
estatecompany inMacau,andtheycanhavea lotofgamingflooravail-
able.Iftheyhaveanunlimitedgamingfloor,itmakessensethattheytry
todrive the competitionout by reserving apart of that formachines.
Thecurrent systemonlybenefitsMelco,at theendof theday.”
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