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Macau casino and junket operators seek clarity over new gambling laws By Reuters


© Reuters. FILE PHOTO – People visit Macau’s Ruins of St. Paul’s, which have seen casinos closed for the past two weeks due to the new coronavirus epidemic, China, February 19, 2020. REUTERS/Aleksander Solum

By Farah Master

HONG KONG (Reuters) – Senior Macau casino and junket executives met with authorities in the world’s biggest gambling hub on Monday seeking details on proposed regulatory changes but received little in the way of clarity.

Online video of the meeting was taken over 70 minutes. The uncertainty has seen shares plunge in casinos around the hub, especially since Macau’s highly lucrative licenses could be rebid next January.

During the 45-day consultation, the meeting provided the industry with the sole opportunity to voice its opinions. It was attended by Sands China (OTC:), Wynn Macau (OTC:), Galaxy Entertainment, MGM China (OTC:), Melco Resorts and SJM Holdings (OTC:).

The Macau authorities identified nine potential areas for improvement, including the supervision of daily casino operations by government officials, increased regulation, and better employee welfare.

During the meeting, industry executives agreed that Macau’s 20-year gaming law needs to be updated and vouched support for Macau’s development as an international tourism hub. Galaxy’s Senior Vice President for Public Relations, Buddy Lam, stated to the meeting that Galaxy wanted additional information in several areas, such as the introduction of representatives from the government and clarifications about potential penalties and responsibilities for crimes. According to him, the company was confident that a compromise could be struck between national and operator needs. Rui Cunha from Macau, representing SJM, said that future licensing periods should include investments in the ex-Portuguese colony.

The Junket Operators, who are middlemen that bring wealthy Chinese big whale Chinese gamblers into Macau, voiced more concern and demanded clarification on amends to make it illegal to accept cash deposits. This is a very common practice.

Kwok Chi, the president of the city’s junket organization, inquired how junket activities could be legalised. He also asked if operators could get capital from the public in order to improve the industry’s image. The junket operator’s share of Macau’s gaming revenues has fallen to around one-third of its previous peak of around 80% due to China’s unrelenting clampdown on money laundering and capital flight. One key interest of concern is a proposed increase in local directors’ ownership of casino operators with investors fretting that U.S. casino operators such as Sands, Wynn and MGM face more risk compared to local rivals.

Permanent residents of Macau have an average 10% vote right. Louis Lau, director for investments at Brandes Investment Partners which owns Macau casino investment, said that if that economic right is changed, there will be a negative perception among Macau permanent residents that Chinese investors might have a chance of buying these companies at extremely low prices. Since last week’s announcement, Sands China lost 37% while Wynn Macau dropped 33% and MGM China tumbled 26%.

Four more public consultations are scheduled for October by the authorities.

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