António Lobo Vilela is a lawyer based in Macau and the author of the Macau Gaming Law Book
The 2022 amendments to Macau’s gaming laws have established clear boundaries for the players in the thriving Macanese casino gaming industry. While there is some unnecessary rigidity, this is a notable achievement. This is what a report in which I participated concluded.
The ban on sub-concessions, which were once authorised to resolve a one-time tender issue and avoid political embarrassment, is a significant development.
Additionally, management companies of casino gaming concessionaires have been eliminated as they proved worthless during the reign of the previous casino gaming concessions/sub-concessions. Casino gaming concessionaires are now prohibited from entering into agreements that allow another entity to assume management powers over them. Any such agreement is null and void.
Furthermore, the Macau government has finally and specifically addressed the issue of ‘satellite casinos’– those run on premises not owned by casino gaming concessionaires or leased from the Macau SAR and named in clause 10/2 of the concession contracts (named in the past by the legal advisors to the former Macau Gaming Commission as the ‘fourth legal entitlement’). For those’satellite casinos’ currently operating, a three-year grace period has been granted from January 1, 2023, during which they can continue to operate as before. This grace period is intended to allow for a transition from revenue-sharing entities to casino management companies – a new player in the gaming industry – in case an agreement is reached with the respective casino gaming concessionaire. Casino management companies are entitled to a specific management fee and nothing else. Still, ‘satellite casinos’ must close if no deal is reached. This is a likely scenario for the 17 currently operating ‘satellite casinos’ (casinos Landmark, Grandview, Kam Pek Paradise, Casa Real, Fortuna, Emperor Palace, Pier 16, Le Royal Arc, Legend Palace, Waldo, and Grand Dragon, and Mocha’s six slot machine parlours), and a concern for those shareholders listed in stock exchanges.
In simpler terms, any agreement or arrangement in which a casino gaming concessionaire shares its casino (gross or net) revenues with a third party or makes or promises to make payments based on such revenues is strictly illegal
The 2022 amendments have also introduced strict rules against sharing ‘casino revenues,’ a broad expression that shall be construed as including any revenue generated at the casinos, gross or net. The prohibition on sharing casino revenues is inflexible as it does not allow exceptions save for the ‘satellite casinos’ during the three-year grace period. No third parties, including casino gaming promoters and casino management companies, can actively or passively participate in the profits and losses generated by casino gaming tables and machines. Conversely, no casino gaming concessionaire can legally share any revenues its casinos generate.
The prohibition is a corollary of the principle of a public tender, which mandates that the Macau SAR can only award casino gaming concessions to private companies through an administrative concession contract following a public tender. Additionally, preventing the Macau government from waking up in bed with someone else is a logical outcome of the assessment of suitability implemented,.
This prohibition is also a critical regulatory measure implemented by the Macau government to ensure the casino gaming industry’s transparency, integrity, and stability. Therefore, it must be strictly enforced. Macau’s gaming laws and regulations must contain best practices for regulating games of chance, but upholding the highest regulatory oversight and governance standards is equally crucial. To achieve this, it is essential to give the casino gaming regulator all the necessary means to investigate and pursue any potential violation.
The harsh punishments that can be imposed highlight the seriousness of misconduct. These penalties may be legal or contractual and may include additional consequences, such as shutting down casinos for one month to one year and publicising the decision in the press by extract.
Violating the prohibition on sharing casino revenues could result in the revocation of the casino gaming concession due to failure to fulfil legal or contractual obligations. Additionally, it is considered a grave administrative offence subject to a fine ranging from 2 to 5 million patacas.
The sharing of casino revenues also constitutes the assignment or encumbrance of the right to operate a casino in part or in whole, requiring the payment of a penalty clause to the Macau SAR of either 600 million, 1 billion, or 2 billion patacas, depending on the circumstances. This situation is outlined in clause 78 of the concession contracts.
According to the current law, the Macau government is barred from approving or authorising contracts that involve casino revenue sharing. Such agreements were previously used to operate ‘satellite casinos,’ also known as “Provision of Services and Licence for the Occupation and Use of Spaces.” The existing ‘satellite casinos’ contracts will expire after the three-year grace period and cannot be renewed.
In simpler terms, any agreement or arrangement in which a casino gaming concessionaire shares its casino (gross or net) revenues with a third party or makes or promises to make payments based on such revenues is strictly illegal.
Any attempt to pursue such practices or maintain them defies gravity!
