Inside Asian Gaming

July 2010 | INSIDE ASIAN GAMING 23 Macau Policy and regulation follows after. That’s especially the case if commercial custom is perceived as becoming too skewed towards the businesses involved and too far removed from the interests of society as a whole. Following the liberalisation of the gaming sector as it had been operating up to 2001, the Macau government assessed the situation. It decided that the concentration of Macau’s gaming revenues on the high-stakes gaming sector (and the taxes thereof ) was closely linked to the junkets’activities and that therefore specific regulation was justified. Administrative Regulation no. 6/2002 (amended by Administrative Regulation no. 27/2009) was thus approved to regulate the activity of promoting games of luck and chance and other casino games in Macau. It covers the licensing and verification procedures related to the suitability (ethically and commercially) of the applicants, their registration with the gaming concessionaires and sub concessionaires, and the payments of commissions or any other kind of payouts to them. This legislation—drafted in Portuguese and Chinese the—two official languages of Macau—starts by defining, in Article 2, junket activity as the activity of promoting games of fortune and chance or other games in casinos to players, through the granting of facilities (transportation, accommodation, meals and entertainment) in return for a commission or other type of compensation by the gaming operator. Article 3 determines that this activity can only be carried out by those licensed by the DICJ for the purpose. By the end of 2009 3 , the DICJ had licensed 169 junkets, 129 being companies and the remaining 40, individuals. This first of two articles analyses the licensing procedure and the junket’s main obligations. A second article will focus on the famous commission cap, its enforcement, and comparison with nearby jurisdictions and what the future may hold for the junket system. The licensing procedure To obtain a junket license the applicant must undergo a licensing procedure that aims mainly to confirm their suitability and that of their shareholders, directors and principal employees or collaborators. The current regulation places a great emphasis on the fact that the procedure and subsequent investigations after the licence is granted are aimed to determine whether or not the applicant or the licence holder is fit to develop the junket activity. If the applicant is a company, Article 4, no. 1, requires that their corporate purpose is solely the junket activity and that their registered capital is only held by individuals and not companies. This is in order to allow the authorities to identify the ultimate beneficiary of the junket business transacted. For companies to apply for a licence, Articles 7, 8, 10 and 11 determine that: 1) A company must be incorporated and the registration of the company at the Business Registry follows only after the license is granted by the DICJ. 2) The applicant, shareholders with more than 5% of the share capital, directors who are not shareholders, and principal employees, must complete Forms no. I and II (coveringdisclosure of background and personal information) and submit them to the DICJ with the application and a criminal record certificate issued by their place of residence. Junket licence holders need to repeat this process every six years, although the authorities also have the power to make interim checks. 3) The applicant must guarantee a deposit of MOP100,000.00, in benefit of the DICJ, to cover expenses incurred in the application procedure (e.g. preparation of risk assessments reports on the applicant or of its shareholders). The balance of the deposit is returned upon dissolution of the junket. 4) An applicant must have the support of one of the six licensed gaming concessionaires and subconcessionaires. The operator must file a declaration stating their willingness to work with the applicant. Following the approval, a junket licence is issued and the business registration is concluded. The junket licence is valid for a calendar year from 1st January to 31st December. Any request for renewal for a further year must be submitted by 30th September. The junket company is then able to operate according with the applicable laws and the terms and conditions set forth in the agreement signed with the gaming operator. Article 24 determines that this contract must be inwritten formandnotarised. Itmust determine the amount and way of payment of any commission or other compensation. It should state the way the junket will operate in the casino, specific spaces assigned to the junket operator and any guarantees made by the junket. The contract should also state that these operational matters will all be submitted to the exclusive jurisdiction of Macau’s law and courts. One copy of this agreement and any changes to it must be filed with the DICJ, within 15 days of its execution. This is to enable the DICJ to assess the agreement for compliance with the junket regulations. Any changes to the shareholder’s or director’s structure and assignment of shares, must be notified to the DICJ, along with relevant documentation. Failure to do so nullifies the legal validity of the changes to the contract. Balancing act–Macau encourages legal casino gaming within certain limits 3 B.O. no. 4, II Series, of January 27, 2010