Macau to limit junket market and review casinos every three years in gambling bill unveiled

The Macau Legislative Assembly published the gaming bill of the world’s largest gaming hub. Shared on Tuesday, the 44-page draft document details officials’ plans to tighten casino control over casino businesses and the controversial junket market. It marks the biggest reform in two decades for the Chinese enclave.

The document was published in Chinese and Portuguese, reports Reuters. It highlights the situation for current licensees: as the government previously announced, new licenses will be capped at six, with license terms halved to 10 years. The licenses of the six current operators are all due to expire in June.

But in addition to reaffirming officials’ intention to maintain six operators, bill clarifies role of junket operators, which attract big players from mainland China by arranging transportation, accommodation and credit to play.

The enclave has relied heavily on this market, which has proven to be very profitable: operators have included rooms to accommodate VIPs, which have mostly closed in recent weeks amid a crackdown in Classes. Outflows of gambling-related funds to Macau were described as a ‘national security risk’ by the government last year, leading mainland China to seek to shut down the market.

If approved, the new bill states that casino operators will no longer be able to have dedicated junket rooms. In addition, revenue sharing agreements between the two parties would be prohibited. Macau will continue to issue junket licenses to approved VIP promoters, but will limit them to operating at only one dealership, adds Reuters. They were previously authorized to operate in all operators, with several rooms.

Plans to increase control over the casino industry are also detailed in the bill under a plan to subject casinos to a review every three years, in which Macau’s gaming regulator will examine contractual compliance. What’s more, each licensee will have a 30% cap on the number of shares that can be traded, and large financial transactions must first be reported to authorities.

The government also details rights to terminate contracts for a number of reasons, including “public interest” or breach of duty. Operators will also have to develop plans to promote responsible gaming, and a cap on tables and gaming machines per licensee is to be introduced.

The draft further lists the actions “expected” of the new licensees, including support for local and medium-sized businesses, “public interest” activities and support for areas such as science and the environment, adds the previously cited source.

While the initial announcement of the gambling bill on Friday led shares of Macau casino operators to rise sharply as investors believed the number of casino licenses would be maintained at the current level of six, shares are now down slightly on Tuesday.

Macau casino stocks surged after new legislation in the Chinese enclave was announced on Friday. A Bloomberg intelligence gauge Casino shares jumped as much as 12% on Monday, the most in more than six years. Wynn Macau, Sands China and Galaxy Entertainment Group each recorded double-digit gains.

The favorable news came after Macau officials announced on Friday that casino licenses at the world‘s largest gambling center would remain at the current cap of six licenses., with a possibility of being extended for three years.

The decision comes as the six current casino licensees near the expiration of their current licenses, which are due to end in June. The government also decided not to go ahead with a plan to directly oversee casinos in the new legislation after comments from operators.

Sands Macau.

Changes to Macau’s gambling law had been described as nice and smoother than originally expected. Operators feared that some of the more unpopular proposals, in particular the appointment of government officials to oversee operations, would be included in the legislation.

Additionally, the Macau government has not announced any current plans to increase the level of taxes on the industry, while the current licenses will remain in place until the new law is implemented. This further eased investor concerns about what the new legislation would entail, sending stocks surging in response..

On Friday, stocks listed in the United States also saw a similar rise, other reports Bloomberg, after Macau paved the way for all current operators to apply for the renewal of their permits. The revisions eliminate most of investors’ main concerns and could lead to a “significant revaluation of the sector”. according to Citigroup analysts.

The newly announced license conditions took into account inputs from a consultation period launched in September 2021, aimed at reviewing and amending the rules of the casino market. Respondents showed support for plans to keep the number of licensed operators in the market at the current total of six, while halving the length of licenses.

The new legislation also requires casino operators to increase the amount of capital to 5 billion patacas ($623.67 million) from 200 million patacas, and increase the requirement for a company director based in Macau to hold 15% of 10%.

What’s more, officials pledged to cap public floats at 30%, which Ku Mei Leng, head of the office of Macau’s Secretary of Economy and Finance, said would “improve oversight” of the gambling industry. The public float cap was not originally included in the game review proposal.

Investors initially feared stronger measures to increase Chinese control over the sector. The new gambling bill has already been sent to the local legislature, where it is expected to pass, as most government proposals are endorsed by Macau officials.

The news comes as Macau recorded $10.9 billion in gaming revenue last year, up 44% from 2020 but still down 70% from pre-pandemic levels amid China’s harsh zero-tolerance policy for coronavirus cases.

Linda Chen, Vice Chairman and Executive Director of Wynn Macau.

While pandemic restrictions and the junket market crackdown are expected to have a big impact on the industry, making its future performance difficult to predict, Linda Chen, vice president and executive director of Wynn Macau, said earlier this month. here that she was convinced that Macau would achieve the government’s goals. gross gaming revenue of MOP 100 billion ($12.4 billion) this year.

Operators now feel confident to be re-launched for their casino operations, while tourist arrivals count on the early days of the new year have been described as a solid starting point. If the pandemic situation remains stable in the city, experts believe that the tourism outlook for the year could be positive.

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