Inside Asian Gaming

INSIDE ASIAN GAMING | June 2008 10 Regulatory style matters because inter- national investment is (for the time being at least) largely run on an Anglo-Saxon admin- istrative model that understands concepts such as permission and prohibition and feels less comfortable with the nuanced approach of guideline regulation. The Anglo-Saxon administrative model involving prescription and proscription can clearly be seen in former British colonies such as Malaysia, Singapore and Hong Kong. Singa- pore knew exactly why it wanted casinos. It was losing tourists to more party-orientated destinations such as Bangkok, and wanted to claw back market share and increase length of visitor stay. It decided casino resorts were the answer, but with strict terms and conditions, including a limit on the amount of resort space given over to gambling and an annual S$2,000 membership fee for Singapore citizens (or daily entry fee for Singaporeans for every con- secutive visit occurring within 24 hours). Clear reporting Singapore also has a robust regulatory structure for gaming. Under the Casino Con- trol Act 2006 , the Casino Regulatory Authority is in charge of the day-to-day monitoring of the industry, under the direct supervision of the Ministry of Home Affairs. The Ministry of Trade and Industry and the Ministry of Com- munity Development, Youth and Sports are respectively responsible for monitoring the economic and social impact of the industry. Singapore’s approach, according to those with enough knowledge to make a sensible judge- ment, is a template for how to go about gam- ing regulation. This robust approach did not preclude Sin- gapore from understanding it had obligations to outside casino investors as well as sovereign rights over them. It couldn’t simply treat them as a cash cow to be alternately patted, prod- ded,kicked or nuzzled as themood or the eco- nomic or political circumstances demanded. Certainty Minister Wong said when introducing Singapore’s casino regulatory law in parlia- ment: “Through this Casino Control Bill, the Government is committed to a number of measures to provide greater certainty and support to investors of our Integrated Resorts. This is because the Integrated Resorts require heavy investments.We want them to succeed after the investors have committed to spend billions of dollars on the projects.For instance, the casino tax rates will remain unchanged for 15 years.The two casino operators will also enjoy an exclusivity period of 10 years.During this period, no new casinos will be allowed. The lease of the land on which the Integrated Resorts will be sited will be for 60 years and they will be allowed to operate a casino for 30 years, subject to the suitability of the casino operators to run them.” Macau’s regulatory framework has been more problematic, because it required mod- ernisation of an existing system rather than building a system from scratch. It is alsomorenuancedbecause it involves codification of a series of overlapping admin- istrative regulations covering constitutional law, administrative law, tax law, company law and criminal law. Unlike Singapore’s Casino Control Act there is no one-stop shop inves- tors and interested parties can go to check on the rules and regulations. Why Regulatory Style Matters Macau has been codifying its regulations since 2001 and now has four basic docu- ments covering: framework law on casino concessions and sub concessions (published in 2001); new regulations for gaming pro- moters (2002); new regulation of credit for gaming (2004) and detection and control of money laundering (2006). Macau’s regulatory system is arguably less transparent for foreign investors than Singapore’s because much of it hasn’t been fully translated into English. Ricardo Siu, Associate Professor of Eco- nomics and Finance at the University of Macau, said in a recent essay: “As far as the regulatory system of Macau is concerned, the local community, much less foreigners, does not comprehend its contents and prac- tices.Traditionally, laws and regulations have for themost part beenwritten in Portuguese, while most people in Macau are Chinese and do not know Portuguese at all. Limitations “Although a small number of key docu- ments were available in Chinese before Macau’s handover, and the MASR Govern- ment has put a great effort into translat- ing existing legal documents into Chinese, as well as drafting some key documents in English for foreign investors, the translated documents are far from sufficient and pre- cise from a legal perspective. “In the event of any dispute over rule interpretation, Portuguese always prevails. Consequently, despite the fact hard cop- ies of related legal documents are equally available to each of the firms, the local in- cumbent would be better able than foreign casino operators to grasp and have insight into the practice of these rulings, hence dealing with legal matters relating to de- signing business strategies. In other words, for new entrants to acquire the same level of knowledge of the relevant regulations as the domestic firm does, they will have to inject additional resources into their busi- nesses (including time, as a kind of trans- action cost).” Strategy lite Nor does Macau seem to have much of a coherent strategy as far as economic planning is concerned. The Macao Eco- nomic Services department is mainly con- cerned with regulatory issues. The Macau government does have a body called the Research Centre for Sustainable Develop- ment Strategies, but it doesn’t seem to be doing much research—or at least isn’t sharing much of it with the public. At the time IAG went to press, the English lan- guage web page hadn’t been updated since 27th March 2007. The only bit of ‘research’ mentioned on the English site is a PowerPoint introduction dating back to 2005 of the territory’s annual Quality of Life study. Even the Chinese and Portu- guese pages haven’t been amended since 22nd January this year. This may say more about the Macau government’s online presence than it does about its policies, but it does arguably re- veal a certain state of mind. Any jurisdic- tion interested in promoting debate and transparency on public policy normally likes to have as much information in the public and Internet domain as possible. Lost in Translation Macau’s gaming rules are still hampered by practical problems Cover Story