Inside Asian Gaming

MArch 2016 inside asian gaming 21 In Australia, gambling policy has traditionally been decided at the level of state governments. Separate states started moving ahead to regulate online gaming during the 1990s. The federal government, concerned about proliferation and the potential for damage to be inflicted by operators outside Australia’s jurisdiction, stepped in and used its constitutional powers to pass a countrywide ban. David Green cites this example to argue in favor of Beijing taking control. “It’s not a case of wanting to put the genie back in the bottle,” he says. “Rather, China is saying, ‘Macau has done unbelievably well out of concessions allowed under the Basic Law. It’s profited from unbridled growth and we’re the ones that have been subsidizing that growth. It’s time for Macau to pull its weight. There should be a real effort to generate attractions and employment opportunities that have nothing to do with non-productive gambling. We need this industry appealing to more than Chinese. Macau has to expand into an international destination.’ ” Macau’s operators turned a deaf ear to Beijing’s repeated calls, Green adds, until the downturn forced them to start listening. “All you heard from them were comments on the high propensity of Chinese to gamble. They were clamoring for 700 or 800 tables, even though no casino in the world has that many. It was very clear who their target was,” he says. “There was a need to break the cycle. Given the real costs would end up back to China, it made perfect sense for Beijing to act in the way it did.” “I think the industry did itself a disservice,” says Green. “Until about 18 months ago all you ever heard was ‘how many tables can I get?’ The message the government wanted to hear was not how many tables, but how can I broaden the appeal of Macau by adding to the stock of non-gaming attractions.” Seen from this point of view, Beijing’s behavior starts to seem less like interference with Macau’s autonomy, and more like prudent management of a potentially dangerous industry. Of course Xi Jinping will never go on the record to say exactly what he wants to do. Keeping people guessing has always been the Chinese way. But perhaps Bruce Kwong’s opinion is a good approximation of what the paramount leader is thinking. “Beijing doesn’t want gambling in Macau to grow beyond a certain size, and it doesn’t want an industry that only acts to drain cash from China,” the Macau University professor says. “China will seek to control the development of the gambling industry. China will also seek to develop mechanisms that facilitate this control.” In Focus account for over half of the island’s stock of capital. The taxes the Special Economic Zone pays after it becomes integrated with Macau will go to China. China’s problem with Macau If China wants Macau to prosper and has no intention of ending its gambling monopoly, whence the table limits, and the conflict between operators and regulators they give rise to? Fortunately, China’s most urgent problem with Macau has already been dramatically reduced. Eilo Yu reckons a ban by China on gambling in Macau for government officials and senior officers in state owned enterprises has been highly effective. He talks about rumors of China’s anti-corruption police placing Macau’s casinos under surveillance, and even hacking into their customer databases. Whether true or not, he says the fear so instilled would scare civil servants from China well away. It’s not clear if the ban will eventually be lifted, or remain in place for good. As for what China wants from Macau in the long run; it’s been making that clear for years. President Hu Jintao, for example, said the region should be “strengthening and improving the management of the gambling industry, diversifying the economy and lifting living standards,” in a speech made in Macau on the tenth anniversary of its handover. Xi Jinping urged “long-term economic diversification” during his first visit to Macau as Vice President in the same year. He has repeated the message several times since. David Green , principal of the regulatory, market and taxation advisors Newpage Consulting.