Inside Asian Gaming

INSIDE ASIAN GAMING | November 2008 28 Feature Big Trouble in Little China Opponents of gaming across Asia may take heart from global chaos T he globalisation of capital flows and investment that ultimately led to some Japanese banks investing unwittingly in sub-prime mortgages in the United States is the same globalisation that helped Las Vegas set up shop in Macau. Now that the world economy’s debt-funded equivalent of a pub crawl is over and many people are nursing sore heads, are we going to see a general lapse into good old fashioned temperance and trade protectionism, and if so, what effect if any will it have on the regulation and taxation of gambling in Asia? The banks that normally help gaming and other investors to maintain their day-to-day cash liquidity are already practising a form of trade protectionism.In many cases they’re refusing to lend to each other or to businesses in the wider economy until counter-party risk abates. This has already had a knock-on effect in Macau, where Las Vegas Sands Corp recently found it hard going to get US banks interested in a tranche of new debt funding for Cotai. The fact that governments the world over have been stepping in to bail out major banks may give encouragement to those politicians who never much liked the free market system in the first place. Suddenly governments are back to their old ways of lecturing businessmen on managerial shortcomings rather than the other way round. Will this mood help political opponents of gaming in those Asian countries where it has been legalised? There are signs it might. In August, South Korea’s National Gaming Control Commission announced it planned to cap the total annual revenue of the country’s gambling industry, including horse racing, lottery tickets and casinos, to about 14 trillionWon (USD13.4 billion). It resulted in an immediate slide in local operators’ share prices. Economic clout If a country is big enough and powerful enough, though, it doesn’t need to hide behind recession as a pretext for economic nationalism. It simply does what it wants. The US passed the Unlawful Internet Gambling Enforcement Act (UIGEA) long before the current global credit crisis.If published reports are tobe believed, the UIGEA came into being principally because in the autumn of 2006 the then Republican majority leader in the US Senate, Bill Frist, needed a popular cause to take voters’ minds off Republican Party scandals and the Iraq insurgency. The bill got tacked on to another urgent piece of legislation and the rest, as they say, is history. The Act is still on the statute books and there is no indication it