Inside Asian Gaming

INSIDE ASIAN GAMING | April 2011 32 Referendum Revisited Taiwan seeks to revive its campaign to bring casinos to its offshore islands Market Outlook Offshore support The Ministry cited the need to bolster the economies of the offshore islands in allowing them to introduce casinos. Last month, the Taiwan press reported the Matsu islands, part of Lienchiang County, were preparing to hold a casino referendum, hoping the introduction of gaming could help revive the area’s tourism industry. The county government is partnering with the Chung-Hua Institution for Economic Research (CIER), which will begin by selecting two locations in the county suitable for the development of large-scale tourism resorts. The CIER will then begin a feasibility study on building casinos at the proposed resorts. Matsu’s referendum is expected to be held by November, after the CIER researchers have identified potential problems and solutions. Lienchian County has a mere 7,700 eligible voters who need to be convinced of the case for casinos, according to a report in Asia Today , which claims the Matsu referendum therefore has a better chance of success than the earlier one in Penghu, where there are over 70,000 eligible voters. Kinmen also seems to be considered a stronger contender than Penghu, with China Economic News reporting companies including Taiwan Land Development Corp and gaming machine manufacturer Astro Corp have acquired plots of land on Kinmen suitable for the development of large-scale resorts.The prospects for casinos on Kinmen were seemingly bolstered when in April 2009, the islet township of Lieyu—located west of Kinmen proper and commonly referred to as “Little Kinmen”—passed a casino referendum. Only 1,630 residents voted on the issue (with 1,131 voting in favour), although according to official data T aiwan’s Ministry of Transportation and Communications (MOTC)—which oversees the country’s Tourism Bureau—released its draft casino legislation on 1st April. The MOTC’s next step will be to secure much needed support among the residents of the offshore islands of Kinmen, Matsu and Penghu, which are the most likely locations of the two casinos proposed under the bill. Taiwan’s parliament voted to legalise casinos on its offshore islands in January 2009. Notably, the decades-old casino ban was maintained on the main island of Taiwan, and lawmakers also stipulated that the residents of the offshore islands needed to approve the development of casinos in their respective backyards in referenda. The most publicised casino referendum was held in Penghu in September 2009, and resulted in a‘no’vote. By law, Penghu will not be able to hold another referendum on the issue until September 2012 at the earliest. Whereas Penghu was originally seen as the frontrunner to host Taiwan’s first casino, the focus has now shifted to Kinmen and Matsu. Taiwan’s pro-casino lobby claims a major reason for Penghu residents voting against casinoswas thegovernment’s failure tocome up with detailed measures to counteract concerns about the potential social ills they could create. The MOTC’s draft casino bill should help allay some of those concerns. from15th April, theMinistry will hold a series of public presentations and hearings on the draft bill in the offshore islands. Responsible gaming measures Under the draft bill, Taiwan will impose responsible gaming measures akin to those applied in Singapore, including a NT$2,000 (US$) casino entry levy for locals (while foreigners will be exempt). Those below 20 years of age will be prohibited from entering Taiwan’s casinos, and a Singapore-style exclusion policy will also be implemented. In Singapore, individuals can apply for self- exclusion from casinos, their immediate family members can apply to exclude them, or they can be automatically excluded if they are bankrupt or receiving financial aid from the government. Other measures designed to prevent the rise of problem gaming among the local population in Taiwan include a ban on casinos extending credit to locals or placing ATMs on their premises, the setting of loss- limits, and restrictions on marketing of casinos to locals. The draft casino bill also needs to pass muster with the Cabinet and lawmakers. The bill will be presented for review and ratification to theTaiwan National Legislative Council in September. If the bill is ratified, a Commission for Casino Control will be established to regulate the industry. The draft bill envisages the casinos as being part of large-scale integrated resorts (IRs). Biddingwill be held for the two licences, with the winning bidders selected largely on the basis of their investment commitments and previous experience developing successful gaming resorts. Bidders will also be subject to stringent probity checks. After the two licences are awarded, there will be a 10-year moratorium on the awarding of further licences. The licence period will be 30-years and the successful bidders will each have to pay an upfront franchise fee of NT$3 billion plus a licence fee of NT$200 million for every three years of operation. The operators are expected to face a gaming tax rate (excluding corporate tax and other fees) of 12-15%.