Inside Asian Gaming

29 will be even a faint blip on President-elect Barack Obama’s political radar. Under those circumstances and at a time of continuing financial crisis, it’s hard to make a rational and fair-minded case for insisting that China should open its online markets to foreign gaming investors.The United States,the supposed spiritual home of the free market, had already effectively stuck two fingers up at free trade and barred its own citizens from access to online wagering back in September 2006—long before the recent storm clouds of recession gathered. Online plans For some time now, Macau has been promising legislation to regulate online gaming, but for the last six months there’s been a deafening silence. Given that the only obvious rationale for Macau to take such a step would be to leverage its linguistic and cultural connections to enable ethnic Chinese customers to have access to locally developed online gaming products, it’s difficult to avoid the conclusion that someone somewhere doesn’t want it to happen—at least not yet. If,as has been suggested,part of the rationale for rationing access to land-basedgamingproduct inMacau is to curbexcessivegambling by some Mainland residents, then it would hardly make sense to shut a physical door and then open a virtual one in cyberspace. Bubble burst? Online gaming companies listed on alternative markets and with interests in Greater China and the Asia Pacific were already experiencing some difficulty in selling their story to investors even before the global equity bubble burst this autumn. This caution among investors was probably because there was a distinct lack of clarity about exactly what would be allowed by China both in terms of type of gaming product and in terms of what companies would be authorised to participate. It was difficult to escape the conclusion that individual deals were being struck that depended entirely on personal relationships between outside entrepreneurs,local partners and state officials or associations. Potential investors in that putative Chinese online sector will not have been reassured by the lack of transparency and lack of debate over issues such as the travel curbs imposed on Guangdong residents visiting Macau. Back in 2001, when the Macau government first invited international operators to apply for gaming licences,the government seemed almost endearingly grateful that the industry’s big players were taking an interest at all. Casual observers formed the impression that Macau was willing to make almost any concession in terms of cheap land or regulatory support in order to make market liberalisation a success. The notable exception to the government’s generosity was the steep 40% tax on gross gambling revenue faced by the successful bidders. Following liberalisation, and buoyed by the obvious success of its revamped gaming sector, Macau has become increasingly assertive towards its guest operators. This trend was evident even before the latest economic turmoil. In other words, Macau started soft and toughened up gradually, emboldened by local success and perhaps the growing clout of China in world politics and economics. By contrast, Singapore has been tough with its operators from the start, but has been arguably more transparent and more consistent—two qualities that foreign investors appreciate, but can often be in short supply in Asia.