Inside Asian Gaming

inside asian gaming January 2016 22 that whilst giving the floor to the real stars of the show, the casino operators and the people and businesses – yes, gaming promoters included – that made it all happen. As with most things in life, the balance in regulation, as accomplished as it may have been, is never perennial. To survive, it must adapt, often rapidly, to the ever-changing backdrop of stakeholders’ priorities and it must do so without overly disrupting what, for some, may be a very comfortable status quo. As Macau thrived on the back of those operators whose investment it attracted, it failed to convince its single most important customer – or so we all came to realize – that the practices overseas regulators accepted were good enough to keep the industry above unwanted influences. Ironic as it may seem, it is the PRC authorities (and not their US counterparts) that are pushing to raise the bar of the Macau gaming industry in what pertains to anti-money laundering and anti- corruption compliance, supervision and enforcement. At the center of these concerns is the VIP market, until recently the backbone of Macau’s casino industry, and the elusive middlemen we know as junkets. For government agencies across the border the high-stakes casino play on credit just does not have a place in the corruption-free China they are relentlessly crusading for. At least not how it has been conducted by many so far. The PRC’s central government policies, albeit not yet translated into serious regulation at an SAR level, have caused a fundamental shift in the industry, raising the mass market share to a historical high and shying away billions in VIP gaming revenues in the process. This imposed readjustment of the Macau model has exposed some of its fragilities, the latest of which re-gained the spotlight with the well publicized “Dore Case”, in which an employee of a junket operator allegedly ran away with millions in investors’ monies. As painful as it may be in the short term, the long-term general direction seems very clear, and that is good, at least for the businesses that are here to stay. Macau is to become a world-class entertainment destination, more geared towards the resort-seeking family than to the hardcore baccarat veteran. However, for the SAR to successfully reinvent its role as a regional industry leader, the Invisible Hand of the regulator has to step away from its comfort zone and translate policy into well-thought out, well-drafted and well-enforced legislation. Nothing less is expected from the new director of the Gaming Inspection and Coordination Bureau, the government body entrusted with assisting the Macau Chief Executive in defining, coordinating and executing economic policies within the gaming industry. Mr Paulo Chan, appointed to office in early December, is a respected man of laws, having been a Public Prosecutor for almost two decades. He has a very challenging task ahead. As is often the case with reactive measures, he runs the risk of going too far, too quickly. On the other hand, being too slow in addressing industry issues may extend existing risks to the best apples of the tree. As most sector players would agree – well managed gaming promotion operations such as Suncity and Tak Chun included – it is positive for business to step up regulation and supervision at this stage of market maturity. Amore serious approach to Know Your (final) Client obligations and a more scrutinizing role at the licensing stage, Rules of the game Ironic as it may seem, it is the PRC authorities (and not their US counterparts) that are pushing to raise the bar of the Macau gaming industry in what pertains to anti- money laundering and anti-corruption compliance, supervision and enforcement. At the center of these concerns is the VIP market, until recently the backbone of Macau’s casino industry, and the elusive middlemen we know as junkets.