By Tim Shepherd
The Macau SAR Government's bill on the new gaming industry regime was passed by the Executive Council in July 2001.
The bill suggests a series of innovations in regulating and licensing, in order to ensure fair competition and effective management in the gaming industry. The new rules prohibit any operator from dominating the industry. Qualifications of bidders for licenses and employees of the future operators would also be regulated by the regime.
One of the new ideas enshrined in the bill is to distinguish “interactive games” operated through telephone, fax, videos and the Internet from land-based casino gaming, and to license them separately. These ‘interactive games” include sports betting across the Internet, but it is not clear yet whether this includes online casinos.
The current operator, STDM (owned in part by Stanley Ho), is a monopoly and has been since the former Portuguese administration legalized gambling in the enclave 30 years ago. As well as land-based casinos, STDM operate horse and dog tracks, keno and sports betting units. Although the casino operations bring in the vast majority of the turnover and profit (average takings on Macau tables are 10 times greater than on Vegas tables) the sports betting unit is growing and the Internet is playing a key role in its growth.
In order to ensure the public coffers' continued income from the gaming industry, the bill proposes a tax system that would generate revenue not less then the current franchise tax. As suggested by the bill, operators bidding for the new licenses must first incorporate a stock company in Macau, and they must also have a bank guarantee whose amount will be decided by the government. For the interactive games license the figure of US$ 750 000 is being discussed but is not firm yet. This figure is effectively the annual license fee, payable in gaming tax. Gaming tax is also being reviewed but is expected to be set at between 20-30 percent.
Licenses for both casino and interactive would be granted in a process of public and open tenders – the first of which, for the land-based casinos, will be announced this month. The interactive license process is expected to start later this year.
This was a widely anticipated move and offers immediate opportunities for aggressive globally positioned Internet and telephone gaming firms. The population of Macau is only 500,000, however the attraction of these licenses is that many millions of tourists from Hong Kong, the mainland and Taiwan, Japan and Korea visit the SAR every year to gamble. Online operations authorised by Macau will have an absolute competitive advantage over those licensed elsewhere through enhanced credibility and marketing opportunities.
Tim Shepherd is the chief executive officer for Inside Track Limited, a consulting firm serving the Asian gaming market. Tim can be contacted at tim@insidet.com .