Inside Asian Gaming

August 2012 | INSIDE ASIAN GAMING 11 there’s a high chance that gaming will take root on Matsu. “I’m an outsider but it feels like there’s support in the legislature to implement the necessary regulatory bill,” he says.“I think it should come to fruition, but in terms of timing it’s a five-year or more story from now.” Weidner Resorts has tabled a NT$60 billion (US$2 billion) bid to develop a casino resort on Matsu. The proposal is based on a complete overhaul of Matsu’s infrastructure (as will be any pitch with serious intent) such as investing NT$12 billion to upgrade the airport from its current 2C classification to3C. BillWeidner himself said inapress conference on 9th July, “I don’t see any problems that cannot be solved by modern technology,” and he’s right. Matsu’s infrastructure can be fixed, but the challenges are numerous. To tackle the task, the Taiwanese administration itself needs a re-think, as Davis Fong, director of the Institute for the Study of Commercial Gaming at the University of Macau, points out. “There are several legal elements for the Taiwanese government to think about,” he explains. “But first of all they need to set up a specific department to regulate the rules of the gaming industry.” The problem, according to Mr Fong, is that to regulate the new industry the executive needs to introduce a new layer of government specifically designed for the purpose. As it stands, the Ministry of Transportation and Communication has taken the reins, but it is imperative the Taiwan government centralizes expertise in one body. The Executive Yuan spokesman, Hu Yu-wei, accidentally hit on the problem last month (July) when he said the Financial Supervisory Commission was best placed to regulate gaming odds, while the Public Construction Commission should oversee the building process along with the Construction and PlanningAgency. His comments suggest that the necessary expertise is currently diluted across government rather than managed vertically down, and that’s before the government has even begun to formulate policies on local residents’ rights to gamble, junkets, tax rates and so on. The formation of a casino regulatory body could be a first step towards addressing the long list of issues the government needs to address. The administrative and infrastructure issues can be addressed with planning and investment, but there is a deeper problem— and that’s Matsu’s geographic location. Owing to the island chain’s location 10 miles from China and 110 miles from the main island of Taiwan, the success of any casino on Matsu will depend on Chinese rather than Taiwanese gamblers. Even if the archipelago’s transportation links are brought up to scratch, the difference in travel time between Taipei and Macau compared with Taipei and Matsu will be negligible: roughly half an hour. The bottom line is that it won’t be Taiwanese gamblers filling Matsu’s coffers, and that will push the fortunes of any casino out of Taiwanese control. Beijing’s Blessing Required “As far as I’m concerned, the success of a casino—whether it’s in Matsu, Jinmen or Penghu (other outlying islands)—will be 100% related to how Beijing views it”, admits Mr Govertsen. If the 37 million residents of Fujian (the nearest Chinese province) are given unfettered access to Matsu, then a casino resort there will be an unqualified success. The chances of that, however, are slim. Taiwan needs some kind of consent from Beijing to allow its citizens to visit any planned resort on Matsu before it even begins the project, but Beijing obviously will not simply sign a document promising a certain number of visitors per year. On top of that, Beijing will be able to use visitor numbers as a bargaining chip with Taiwan. Essentially, it’s in Beijing’s best interests to support the project in its infancy, because if it comes to fruition, Beijing will have de facto control over its revenues and be able to use that as leverage in cross-straits diplomacy. Beijing has a historically hostile relationship with Taiwan, one built on decades of military strategising, aggressive diplomacyandnoweconomicincentivisation to re-unite Taiwan with the Mainland. Despite relations between Taiwan and the Mainland having thawed in recent years, the upshot is that it’s almost inconceivable that Beijing won’t use visitor numbers to lean on Taiwan—the Chinese agenda precludes that—and Mr Govertsen says you don’t need to look very hard to see these kinds of forces at work. “We’ve had instances in Macau over the last couple of years where Beijing decides, perhaps after somebody ticked someone off, that they would teach somebody a lesson by imposing restrictions”, he explains. “And I think that will be even more likely in a political environment like Taiwan’s which is considered renegade.” Beyond the political tête-à-tête between the two sides, Matsu is also a vital military outpost, which in its heyday was home to over 50,000 Taiwanese soldiers. Today, that number stands at a little more than 3,000, Market Outlook Small feeder—Matsu’s Beigan airport