insid e asian gaming A pril 2016 4 EDITORIAL Steven Ribet We crave your feedback. Please email your comments to
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[email protected] or call +853 6688 7214 or +853 6280 8737 Printed by Cochin Advertising Printing Service Co., Ltd. Est. Nova da Ilha Verde 180 r/c R www.asgam.com ISSN 2070-7681 Chief Executive Officer Andrew W Scott Managing Editor Steven Ribet Editor at Large Muhammad Cohen Other Regular Contributors Paul Doocey, Kareem Jalal, Rui Pinto Proença, I Nelson Rose, Andrew W Scott Graphic Designer Rui Gomes Photography Ike, Gary Wong, James Leong, Wong Kei Cheong Founder and Adviser Kareem Jalal ◊ Chief Marketing Officer Derrick Tran Chief Sales Officer Paul Lee Chief Operating Officer Michael Mariakis Director and Administrator Cynthia Cheang Administrative Assistant Suie Ng Letting the light in on Macau’s junkets S ince Macau’s gaming downturn turned out to be not just a short-term dip but a protracted slump the city’s leaders have been talking continuously about improving industry oversight. In a policy address before the launch of the sector’s mid-term review a year ago, for example, Chief Executive Fernando Chui stated his government planned to “enhance gaming-related laws and regulations, strengthen supervision of the gaming industry, regulate gaming businesses’ operation and continue to push for responsible gaming.” Greater transparency has often been mooted as a means to this end. If the government is serious about achieving a well-regulated casino industry it could open the Gaming Inspection and Coordination Bureau (DICJ) to public supervision. This is the norm for jurisdictions in Europe and North America. The stated mission of the Massachusetts Gaming Commission, for example, is to “create a fair, transparent and participatory process for implementing the expanded gaming law.” Macau’s important but beleaguered junket sector is one area where nobody will deny the DICJ has not done a perfect job. A series of thefts from gaming promoters, including an astonishing US$1.3 billion stolen from the Kimren Group in 2014, has highlighted their work as unlicensed and unregulated lenders; borrowing from investors to finance high-rolling gamblers. Both inside Macau and abroad, there is also a widespread perception of organized crime involvement in Macau’s VIP rooms (see page 20 article). Politicians and academics have criticized the Bureau with claims that its process for handing out licenses to the junkets lacks openness. “You cannot look at applications. They are confidential,” says legislator José Pereira Coutinho. “I don’t know what they [the DICJ] are doing. Nobody knows what they are doing.” In January the DICJ made a step forward when it introduced a requirement that junkets compile and submit monthly accounting reports. Of a total of 176 junkets in operation, 35 were unable to do so and had their licenses revoked. The downturn was no doubt pushing some out of business, but it’s clear others were not deemed fit to be running their own casino operation. On top of stricter accounting, Kwok Chi Chung, who is president of the junket group the Association of Gaming and Entertainment Promoters, has said he favors widening licensing requirements beyond junket operators themselves to include the collaborators they sub-contract to recruit gamblers. Yet even expanded licensing requirements would leave plenty of space for abuse. As things stand, it’s entirely up to the DICJ to pressure each gaming promoter to disclose every financier and profit participant in its business. These may be influential stakeholders or even the junket’s true owners, even though their names do not appear on official paperwork. We don’t know how much due diligence the DICJ is doing on the promoters it is giving licenses to; how thoroughly it is investigating them for suitability. As Coutinho says, the Bureau doesn’t have to give out information on any of these things. The way forward is transparency. The DICJ could open the process to the public, letting us know the identity of the casinos that junkets contract with, the chip volume that junkets roll, their shareholders, key employees and collaborators. Like some jurisdictions, it might even allow ordinary citizens to attend the hearings it holds to assess the suitability of applicants. Last October, the DICJ issued a statement saying it would revise “as soon as possible” the Administrative Regulation No. 6/2002, which regulates the conditions and procedures for issuing a license to a gaming promoter. The revision, it said, would focus on implementing new requirements for capital and the shareholding structure of junket operators, introducing tighter rules on accounting and auditing. Crucially, the statement also talked about making public more information about the gaming promoters, “to guarantee that the people involved with a junket operator are suitable, leading to more transparency in the sector.” Yet while new accounting rules have been brought in, improved transparency has not. The US Supreme Court Justice Louis Brandeis famously remarked that sunlight is the best disinfectant. On transparency, it’s time to move forward.