Inside Asian Gaming

inside asian gaming November 2017 22 contractual mechanisms to promote and, when necessary, impose the compliance of operators with their obligations. Thirdly, but no less important, they are limited in time. At the end of their term the government may reassess its policies for the sector and make a judgment on the capacity of existing operators to pursue them. The last time the Macau SAR Government conducted such an exercise was in 2001, when it decided to move away from a monopolistic concession and launched an international public tender. From such a tender, three concession contracts and three sub- concession contracts were awarded, allowing for a total maximum of six casino operators in Macau. Why, then, do we see a myriad of lesser known operators running numerous casinos throughout town? And why are fresh satellite properties opening, relocating and changing hands under the umbrella of concession contracts that may expire within two to four years? The answer to the first question has historical roots that have transpired into the 2001 gaming law. What may be the answer to the second question could affect the government’s ability to define policy following the term of the existing concessions. It may ultimately influence what the post-2022 gaming framework will look like. A concessionaire’s right (and obligation) to operate casinos is, by law, unassignable to third parties … except with previous government authorization. This five word exception found its way into the 2001 gaming law and effectively created a backdoor entrance to the party. The move was deliberate and represented a real-life approach to the Macau gaming market of that time. This was simply the way things were run under Dr Ho’s monopoly. The pie was shared with a tangle of smaller players. These represented different interests of the local business community and operated with a substantial degree of autonomy vis-à-vis the concession holder. If Macau had moved forward with modernizing the gaming sector while ignoring this reality it would have risked serious social unrest, which could ultimately have jeopardized its credibility as an international gaming jurisdiction. Let us not forget that the pre-handover 1990s saw shootouts on the streets and bombing of gaming inspectors’ cars! As with all meritorious exceptions, this one ended up being overused. What was meant as a mechanism to accommodate a certain status quo was quickly turned into a channel for new players to enter the market without passing “Go.” As a result, there are currently 16 active satellite casinos – almost as many as the number of casinos directly operated by all six concessionaires. Having realized the direction the industry was heading due to this trend, the government issued the famous “2008 Moratorium” – a policy decision (never translated into law) that told the market there would be no further approvals of such arrangements and that the ones currently in place would remain as they were. Until this year, the 2008 moratorium was perceived as an unavoidable reality. But that perception has been challenged by “What was meant as a mechanism to accommodate a certain status quo was quickly turned into a channel for new players to enter the market without passing ‘Go’.” Rules of the game