by António Ramirez /Luís Pessanha

António Ramirez /Luís Pessanha

One issue which has been repeatedly made public has been the proposal to impose a regulatory cap on the number of gaming tables that each operator would be allowed to offer to the public under each concession. So far there are no such restrictions and casino sub/concessionaires are free to operate as many gaming tables as they see fit. Likewise, each operator can simultaneously run an unlimited number of casinos under the umbrella of a concession. To add a new casino venue to the list of gaming properties that a given operator is running at each time is a reasonably common occurrence and usually unproblematic, as long as the venue in question is suitable to offer casino gaming to the public and follows the relevant guidelines and regulations, or at least such was the case in the recent past. There is no need to run each single casino property under a separate license, as in most other gaming jurisdictions. In Macau the number of tables operating is controlled mainly for tax reasons, as taxation arises on the gross gaming revenues and a small annual premium is due per gaming table.
The first broad reference to the potential restriction of the number of gaming tables offered to the public by each operator was initiated by announcement of Mr. Edmund Ho, Macau SAR Chief Executive, made at the Legislative Assembly on the 22 April 2008. It was then briefly mentioned that the Macau SAR Government would not approve an increase of the number of tables in addition to the ones already approved or under review. On 22 May 2008, this very same issue was reported to have been again put forward at the first meeting of the newly created gaming consultative council in which the representatives of the six authorized sub/concessionaires were received by the Macau SAR Government to address overall gaming policy and in particular the difficult matter of restricting the commissions paid to the gaming promoters. This issue surfaced again more recently on 8th of July 2008 in the second meeting of this newly established gaming consultative council. Hence, it must be recognized that some form of restriction of the number of gaming tables is at least under consideration by the local regulators, even if, as could have been expected, no quick consensus has so far been reached. The idea which has been ventilated at this stage appears to be to allow each operator to operate a certain fixed number of gaming tables under each single concession.
It should be mentioned that a restriction of the number of gaming tables would have solely an impact on the mass gaming market and not on the VIP gaming market, which does not require a vast number of tables. In this sense, the purposed limitation on the number of tables would further increase the importance of the premium market for the casino gaming market of Macau. Mr. Francis Tam, Secretary of Finance, said that the Government would like to see a development of the mass market, and it seams that this proposal to limit the number of tables will not help with this aspiration.

This may imply that the operators would not be able to offer the volume of gaming that the mass casino gaming market requires or may require in the future. Hence, it is a misconception that the tough competition presently taking place at the premium casino gaming market of Macau would support or justify this proposal. This is simply not the case.

But the issue is not only that a restriction on the number of tables would contribute to an increase of the perhaps undesirable dependence on the premium gaming market, even if this obviously has to be carefully considered at policy level. The other main point which should here be briefly referred to is that it makes little sense that all operators have the same number of tables, as there are simply huge differences between the size of the properties they run and the amounts that they have invested in Macau.

To determine that all sub/concessionaires cannot exceed a certain amount of gaming tables would be unfair and unreasonable for the operators who have invested the most and constructed vast casino properties precisely to dispute both the premium and the mass market. And would almost certainly be disappointing that suddenly, after having committing billions of dollars to develop top properties and resorts in Macau, they would have to deal with a ceiling on the number of tables they can operate. For the other operators, who are only focusing on the premium market and have made little investment in the mass market, this proposed measured would have no significant impact. This makes clear that in essence this proposal would restrict competition between the operators and would hurt whoever invested the most and committed more resources to the casino mass gaming market.
It is important to consider that the concessions agreements impose that the company’s awarded with a gaming license should invest in Macau SAR. Venetian Macau Limited for example made investments unparalleled in the history of the gaming business in Macau in order to develop the mass market, MICE, retail and entertainment. At this stage we all know that the non gaming revenues are less profitable than the gaming and in same cases these non gaming activities even present negative results.

The intention of the Macau Government by awarding new gaming concessions was to develop the economy of Macau and the satellite businesses of the gaming industry. The multi billion dollar projects should be supported and Macau should not create greater opportunities to reward those who have invested less and contribute less to the development of the tourism and entertainment business.

Macau has now the ability to offer a 6 star experience to those who are looking for an entertainment experience, with top quality hotels, a life time experience in shopping, casinos like nowhere else in world. Instead of imposing a cap in the number of tables, maybe it is time to be focused on some properties that are not up to the new top standard of Macau, like some small casinos in office buildings that we can still see in town. The question may not be the number of tables but the quality of the projects. For sure the market will take care of that problem by natural selection and those who have no quality will eventually close.

It will be unfair and even against the concessions agreements to impose a limited of number of tables that will allow the gaming licenses holders to have an equal number of tables. At this stage the investments are completely different among the license holders, so an equal number of tables would bring disadvantages for those who invest more and advantages for those who did not invest so heavily. Today the operations costs are completely different from property to property.

The concessions agreements impose a duty on the Government to ensure a fair and competitive market among the gaming concessioners. An equal situation must be treated as equal and a different one as different. In our opinion restrictions should be imposed in terms of developing projects with lower quality or that do not develop business other than gaming. A cap in the number of tables may not be a solution and if the concessioners will have all the same number of tables for sure this will be unfair.

Maybe the restrictions will affect also the umber of slots machines, for sure if the Government will consider to cap the number of tables maybe will also cap the number of slots per concessionaire.

Date Posted: 29-Sep-2008

Antonio Ramirez is the Managing Partner of Ramirez Law Firm. Member of International Masters of Gaming Law, with years of experience in the Gaming Industry, worked as an in-house counsel for an American gaming operator. He can be reached via e-mail: antonio.ramirez@ramirezlawfirmacau.com or by phone (+853) 2871 6221.
Luís Pessanha is a lecturer on the Faculty of Law at the University of Macau, where he lectures tax and administrative law. He earned his L.L.B. from the New University of Lisbon; he has a postgraduate from the Catholic University of Lisbon and obtained his L.L.M. from the University of Macau. He may be reached via e-mail at luisp@umac.mo.

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