Macau Considers I-Gaming Regulation

27 February 2007

All doubts as to whether regulators in Macau want to embrace interactive gambling have been put to rest. The way to a regulated prosperous I-gaming industry in the special administrative territory is not entirely evident, but Jorge Costa Oliveira's presentation at the Fifth Annual Pacific Congress on I-Gaming (PCIG) is a clear indication that the will is there . . . and it is strong.

Oliveira, who oversees legal matters for the Macau Gaming Commission, told an audience of 200 PCIG attendees that he is 100 percent behind the passage of I-gaming regulations and that it could happen within the next year or two. He also shared very clear objectives for moving forward with a regulatory model.

For starters, Oliveira sees no reason to reserve concessions for an exclusive licensee (as is the case now with MacauSlot being the sole licensed Internet betting operator). To the contrary, he stressed that they do not wish to impose a limit on the number of licenses issued. They do not, however, intend to ease regulations for the sake of expanding the field of qualified operators.

"We will not do it just to sell licenses," he stressed in support of the board's commitment toward a very high level of regulation.

Further to that, they will also employ proactive measures, including the setting of limits, to prevent social harm.

All of this amounts to a potential regime that bears many similarities to the U.K. approach, and Oliveira acknowledged this by crediting England for providing a viable model. Of importance in the international picture is the system's establishment of an open market that knows no borders. This means Macau, under the plan outlined by Oliveira, would place no restrictions on where its online gambling licensees can offer their services.

As for countries like the United States, where foreign online gambling operators are forbidden from targeting U.S. customers, "It's up to them," he suggested, "to enforce their prohibitions."

One difference between the U.K. and Macau approaches, Oliveira said, is the expected time frame. He did not offer up target dates, but he implied that Macau would move much more quickly than the United Kingdom, which passed the umbrella legislation covering online gambling in 2005. The U.K. government is not expected to finalize the online gambling regulations until September 2007 (provided there are no delays).

And unlike England, which has yet to define tax rates for I-gaming, Macau would establish the terms of taxation up-front in the process. Taxes would be based on gross gaming revenue, and there would be no additional takes on income.

The gaming license itself would be issued on a two- to five-year trial basis. (Oliveira suggested it will likely be five years.) It will cover pari-mutuel wagering or pool betting; lotteries and similar activities; games of chance; games of skill; and betting exchanges.

The regulation of Internet gambling in Macau is, of course, subject to legislative approval--something Oliveira believes is attainable. For such approval, they will look to the government of Macau and not the government of the People's Republic of China, which took over Macau from the Portuguese in 1999.

Further, he stressed that making arrangements with the Chinese government "to enhance legal certainty" will not be necessary.

The biggest factor determining whether I-gaming flies in Macau would likely be what comes of the trial period. One thing is for sure: With gaming revenues doubling (and soon to be tripling) expenditures, Macau isn't hurting for the money. So, I-gaming advocates there won't be losing a lot of sleep if it doesn't work out.

"It is not a big concern for us," Oliveira said. "If it works, it works."

Mark Balestra

Mark Balestra is the Managing Director at BolaVerde Media Group. He previously worked at Clarion Gaming and the River City Group where he was the publisher of iGamingNews. He lives in St. Louis, Missouri.