by António Ramirez /Luís Pessanha
SIDE BETTING IN MACAU
António Ramirez /Luís Pessanha
Side betting is increasingly an issue of concern for the gaming industry in the world. It unfairly exploits bets placed in an authorized casino to conduct clandestine parallel betting, which are linked to the outcomes and payoffs of the lawful wagers. Such is made possible thanks to a side agreement between the player placing the bets and a third party who promises to cover an additional illegal parallel bet. What appears to be a simple bet placed at a certain casino table might represent hidden supplementary wagers. Hence, a single dollar lost or won in a bet at a casino table may well correspond to two, five, ten or even hundred tax-free dollars under a parallel bet agreed with a third party. It is clear that side betting is a threat to the gaming revenues, if a substantial portion of the sizeable bets placed by the premium players are done off the record under the table by way of private betting agreements. Since as of 2007 approximately 66.5% of the casino revenues of the Macau SAR were obtained in the VIP and premium gaming market it is rather obvious that this is a matter of great interest for the Macau SAR.
II. Tax Implications
The local casino operations in Macau are subjected to heavy taxation on all gross gaming revenues generated, which is by far the most important source of public revenues for the local Macau government. It is a well known fact that taxes are presently due at a rate of around 39% on all money collected by the local casinos. Furthermore, the applicable legislation imposes a vast number of duties and obligations on the casino operators to make sure all amounts are properly disclosed for tax purposes. However, wagers placed under side betting schemes do not generate revenues for the lawful casino operators, are never disclosed and allow for no taxation to be collected, so the Macau Government loses unknown millions with this type of activity.
For the Gaming Operators side betting at best represents unwelcome and unfair competition, since clandestine gaming pays no taxes, lacks all forms of public supervision and eludes the applicable regulations. It represents nothing else than a parasitary scheme that takes advantage of the credibility and trust that the licensed casino games enjoy before the general public to siphons away part of the gaming revenues.
III. Gaming Supervision
From the point of view of gaming supervision side betting is particularly problematic, since it might be an easy route to defraud the strict restrictions concerning access to casino gaming imposed by law, potentially allowing that unsavoury and unsuitable parties are able to indirectly take part in casino betting. Considering that side betting is unlawful and even persecuted under the applicable criminal law, one should assume that such parties are fully aware that they are breaking the law and engaging in illegal activities.
The gaming inspection (DIJC) must have the ability and the manpower to develop more active investigations on side betting in the near future. DICJ must be able to cancel junkets licenses who are suspected of accept or participate on side betting. It is important to consider that DICJ will be able to cancel or at least elect not to renew a license of a Junket who operates under a suspect of participate on a side betting scheme. Side betting by any licensed gaming promoter (legal jargon for the junkets) should be considered a breach of the applicable licensed terms and sufficient ground for the termination of the relevant gaming license. Furthermore, all parties involved in side betting should be banned from the gaming venues and blacklisted from all local casinos. Usually side betting is associated with the junkets, but the phenomenon goes further than that, it can be developed by casino employees, junkets employees, other patrons, etc.
IV. Criminal Law Implications
The Macau lawmaker resorts to criminal law to suppress all forms of underground gambling, which includes a provision that punish unlawful gaming, even if it takes place in an authorized casino venue. Under a particular harsh criminal law provision not only it is a crime, punish with up to 3 years of prison or fine, to offer unlawful bets in a authorized gaming venue, but also to place such illicit bets as such, which is punish with up to six months or a fine. Therefore, in addition to a criminal law provision aimed at punishing the provider of unauthorized gaming, also whoever places such irregular bets in an authorized gaming venue is punished. Hence, all parties involved in side betting are liable for criminal persecution.
In this regard please see article 7 of Law 8/96/M, 22 of June.
Depending on the facts, and if usury is also involved, apart from the 3 years mention above article 219 of the Macau Criminal Code punish it with up to 5 years of prison.
V. Final Remarks
The real size of the problem is difficult to assess, as side betting agreements tend to be done in outmost secrecy and parties taking part in such illicit betting agreements are aware that they have nothing to gain and everything to lose from making their arrangements public. The unlawful nature and criminal persecution of side betting makes it difficult to understand how much of Macau’s gaming market has been so far cannibalized by side betting. Moreover, it is obviously a difficult task to detect and proof that a certain player is placing side bets in a casino gaming venue. However, it is in the best interest of the industry to avoid that side betting takes place in their casinos, as they clearly represent a source of lost revenues for the lawful operators. There is an obvious incentive for the gaming industry to work together with DICJ to prevent and combat side betting.
We believe that it is important that the gaming inspection and the judiciary police have a dedicated team to investigate this phenomenon, it is also important to understand that to see some results, a clear message must be send by cancelling licenses and launching criminal law suits against those who are suspected of committing such crime. Without a clear message saying that authorities are alert and will not tolerate such behaviour it is difficult that all the good laws that Macau already have to prevent this activity will be sufficient complied with.
Date Posted: 13-Apr-2008