INSIDE ASIAN GAMING | January 2013 2 Inside Asian Gaming is published by Must Read Publications Ltd 8J Ed. Comercial Si Toi 619 Avenida da Praia Grande Macau Tel: (853) 2832 9980 For subscription enquiries, please email
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[email protected] EDITORIAL A New and Better Game, Rules Attached It took almost 10 years, but Macau finally has a set of machine gaming standards and regulations capable of leading a dynamic industry into the 21st century. They came into effect with the New Year and establish what the market never had up to now: a direct relationship between manufacturers and the Gaming Inspection and Coordination Bureau (the DICJ, as it’s known by its Portuguese initials). “It levels the regulatory field, as it were,” is how one attorney close to the process describes it. As a result, procedures are now in place requiring “approval” (licensing, for all intents and purposes) of every company selling or distributing EGMs into the market, with a six-month grace period to comply. Similarly, all games must now be approved before being sold into the market through submission for certification by any one of seven designated labs. All supplier contracts greater than 1 million patacas must be filed with the DICJ. Manufacturers must also disclose to the bureau the names of all technicians engaged in Macau in installing, repairing or improving games. Manufacturers are now subject to background and suitability checks. This extends to their directors and all shareholders holding 5% or more of their equities. The six-month reprieve applies here as well, and mercifully there are provisions waiving the checks for companies already licensed in those jurisdictions recognized by the DICJ: Singapore, Australia/New Zealand, the UK and the US states of Nevada, New Jersey and Mississippi. However, ongoing regulatory compliance will be required. This means, among other things, that manufacturers must report to the DICJ the numbers and types of games they’ve installed in each casino and inform it of all business activities they’ve conducted in Macau in the previous year. They must keep the DICJ informed of changes affecting “material aspects” of their businesses in other jurisdictions as well, including but not limited to litigation, variations in business volumes, the loss of a license or any sanctions or penalties, any changes to shareholder structures equal to or greater than 5%, and all material information provided to stock exchanges. Needless to say, suppliers and their lawyers will be poring over all this for some time to come. Of particular interest are provisions requiring that EGMs be equipped to accept a central monitoring system, although nothing of the sort is required yet; and one stating that manufacturers may be held liable either separately or jointly with operators for any damages incurred by a player or the government as a result of a problem with an EGM. The other part of this new regime, “EGM Technical Standards, Version 1.0,” as it’s titled, came into force last February with a grace period that expired on 1st October. The operative word here is “certainty,” as one expert in the field explains it. “All stakeholders now know what is, and is not, acceptable in machine manufacture and operation,” he says. For example, they now know the minimum RTP is 70% and the maximum 98%, and that the minimum must apply also to games that incorporate a “skill” component, be it a level of physical dexterity or hand-eye coordination or what have you. Likewise, with bonus games, payouts must conform over the length of the bonus cycle to the minimum RTP, and the likelihood that a bonus event will occur cannot be adjusted based on the outcome of previous games or prize history, which is to say that games cannot adapt their theoretical RTP based on past payouts. The standards also address how game-play information must be displayed and explained— everything from credit balances, bets and denominations, to possible outcomes, pay tables, winning pay lines, player options and help menus. So-called “near misses” or other “deceptive” or “misleading” displays are prohibited. All game displays, instructions and help menus must now be in Chinese and English, and players must be able to choose their language. As our expert puts it, “The operation of gaming machines and their associated software is not transparent or obvious to players, unlike table games. Machine players do not know anything about their odds of winning or the volatility of the games. The Standards protect and provide certainty for all stakeholders—government, concessionaires, manufacturers and players—by dealing with such things as requirements for metering and auditability, the prevention of tampering or interference with machine operation and game outcomes, the type of software that can be operated, the memory and game recall functions necessary to ensure players can contest disputed payouts, the languages used in game instructions, and the mitigation of any risks to players from machine emissions (electrical and magnetic) or malfunctions.” In all, Version 1.0 is pretty straightforward, based largely as it is on guidelines developed by Gaming Laboratories International and in force in most regulated markets. Beyond the dual-language requirement there isn’t much contained in it that manufacturers aren’t already incorporating into their designs, displays and operations. This isn’t to say it isn’t important. It injects clarity, now formally backed by the DICJ, into the critical space where game and gambler meet. Its aim, as it states up front, is nothing less than to ensure that machine gaming in Macau is “fair, secure, reliable and auditable”. What’s at stake is no less than the public’s trust.