Inside Asian Gaming

INSIDE ASIAN GAMING | October 2008 46 W hen a gaming regulatory system is new, regulators, both the true casino regulators and lawmakers, have freedom to play at being social engineers. They can impose fairly arbitrary rules for what they think is the protection of the general population. This is how you end up with docked riverboats throwing all their patrons off the ships at the end of phantom cruises. New regulators also have to show how strict they can be. So they impose stiff punishments for minor violations and are often inflexible in allowing the rules to change to match real-world experience. It is not fair to say that regulators don’t know what they are doing (although that is sometimes true of legislators). Casino regulators learn fairly quickly. But at the beginning, they often spend a lot of time reinventing the roulette wheel. Casinos face different problems if a system is too old. In fact, the existing casinos usually don’t have many difficulties, because the regulators often become their friends. It is potential competitors and players who find themselves shut out. Macau is unique in that it faces the best and worst of having a system that, at the same time, is too new and too old. And most of the problems this has caused have been ignored, because everyone is making so much money. Start with the number of licenses. Can anyone say exactly how many there are? Macau is theonly jurisdiction in theworld that licenses operators and not casinos. The system developed from the Portuguese law of concessions. America has a similar history, only we call them regulated utilities. The idea is that something that is vital, but too expensive to build, should be given to a monopoly operator. Telephone, gas and electric––I still don’t have a choice of cable television companies. In 1937 Macau gave the gaming concession to a single company. But unlike monopoly operators in most other parts of the world, the company was not limited to one casino. After the establishment of Macau as a Special Administrative Region of China in 1999, the government decided to end the monopoly. It was only natural, and fair, for those companies winning the new concessions to also be allowed to operate more than one casino. One of the successful bidders was a partnership between Galaxy Entertainment and Las Vegas Sands, which fell apart. Most Victim of Its Own Success Most casinos in the world face one of two major problems with their government regulators. Either the system is too new, or it is too old. Macau is both Regulation The Hotel Lisboa was the frontispiece of the gaming monopoly in Macau