Inside Asian Gaming

November 2017 inside asian gaming 21 “The operation of games of chance for profit is an activity reserved by law to the Macau Government and so may only be pursued by private entities that have been awarded a concession contract.” complex. Fast forward to June and we witnessed the opening of a new casino at Taipa’s newly built Roosevelt Hotel, described as a relocation of the former Macau Jockey Club Casino. Three months later, a company associated with a veteran businessman and former legislator, Chan Meng Kam, cut the ribbon of Royal Dragon Casino – a new property on the Macau Peninsula. The same businessman surprised the market again in October when it was announced that he had signed a sale and purchase agreement to acquire Hotel Lan Kwai Fong, another downtown hotel and casino. What do all these properties have in common? For starters, none of them have a stand-alone casino license. They are what we in Macau call a “satellite casino” or “service provider.” Secondly, all operate under the umbrella of the SJM license. To be precise, they operate under the concession contract between the Macau Government and SJM, the offshoot of Dr Stanley Ho’s former monopoly operator STDM and one of the three original awardees of the 2001 gaming concession tender. As many readers of Rules of the Game would know, Macau allows the operation of casino games of chance under an administrative concession contract framework. A concession contract is a civil law concept used in the Portuguese legal tradition as the preferred way for the government to outsource public services to private entities (the provision of water and electricity, waste management, public transportation and so on). It is also used to allow the commercial operation of activities that, although not being of direct public interest, are as profitable as they are socially costly. This is the case in gaming, which is an activity that may generate considerable (tax) revenues but has a strong potential to induce addictive behaviors in its consumers and is particularly vulnerable to fraud and certain types of criminal activities. For such reasons, the operation of games of chance for profit is an activity reserved by law to the Macau Government and so may only be pursued by private entities that have been awarded a concession contract. Gaming concession contracts have three important characteristics. Firstly, they are awarded by public tender, a transparent and competitive process that allows the government to select the best, most suitable and financially sound operators. Secondly, they create a direct relationship between operator and government that incorporates mutual checks and balances and Rules of the game