Amendments to the Macau Gaming Law – what will change?
Expert Insight provided by Pedro Cortés, Managing Partner of RATO, LING, LEI & CORTÉS – Advogados e Notários | Lektou
Macau government proposed to the Legislative Assembly amendments to the Macau Gaming Law (Law 16/2001), which follows the consultation process that took place from September 15 to October 29, 2021, with the results announced in December 2021, and the approval by the Macau Executive Council. 

The proposal intends to improve the current legal regime and approach new external and internal trends. 

This brieg analysis intends to provide a summary of the significant amendments. 

Public policy
There are several changes to the current gaming law, including the public policy statement, which is currently in article 1.2.

With the proposal presented, the public policy statement will include as main objectives that the:
(1)   exploitation and operation of the casino games are conducted under the basis of the safeguarding of the national security and of the Macau SAR;
(2)   development of the adequate diversification and sustainable development of the Macau SAR economy;
(3)   exploitation and operation of casino games are conducted in a [manner] fair, honest, and free from criminal influence (same as the current version of the law);
(4)   assurance that the exploitation and operation of casino games is in line with the policies and mechanisms of Macau SAR in relation to the combat of illegal cross-border capital flow and the prevention of money laundering;
(5)   dimension and operation of casino games, the practice of games and the entry in casinos are subject to legal restrictions; 
(6)   those involved in the supervision, management and operation of casino games are suitable persons for the offices (minor change in relation to the current number 2)
(7)   protection of the interest of the Macau SAR in getting taxes resulting from the operation of the casinos is protected.
When compared with the version in force, the introduction of number 1 – relating to the protection of the national security – and number 2 – which states that one of the objectives is to have the development of the adequate diversification and sustainable development of the Macau SAR economy – are the two main changes in relation to the statement of public policy.
A new set of definitions is incorporated in the proposal, including a slight amendment to the definition of "casino", "table games", the concept of "key employees" – which are included the members of the governing bodies and other corporate bodies of the companies, secretaries, any employees who represent the company, as well as any other employees who have powers to practice acts relating to the human resources, finance or business management. 

Management companies, gaming promoters, gaming promotion activity and collaborators also have a new or a revised definition. Pari-mutuel definition was not included in the current proposal, but interactive games were kept with the exact definition as in the current version of the law.
Types of games and location
The games authorized to be operated in the casinos were kept the same as in the current version of the Macau Gaming Law. 

As to the premises where the operation of casino games can take place, it is now stated that they can only be operated in accordance with the urban planning of the Macau SAR and the impact in the community, and after the advice from the Specialized Commission for the Casino Games ("Commission"). 

In addition, the concessionaires will be obliged under the new article 5 to operate games on owned premises. 
Number of Concessionaires and Term of the Concessions
It is now stated in article 7 that the number of concessions will be set at six and that the term of the concessions cannot exceed ten years. The exceptional power of the Chief Executive to extend the duration of the concession beyond ten years, one or more times, is kept provided that it does not exceed in total threeyears (current version states five years).
The scope of article 14 of the Macau Gaming Law in force is proposed to be expanded. Sub-paragraph 4. has new points in the criteria for the suitability assessment, including:
  • Whether or not the entity subject to the assessment takes excessive risks in regards to the manner it conducts business or the nature of its professional activity;
  • Grounded suspicion on the source of funds;
  • Existence of unsuitable operations with organized crime;
  • Sentenced to a crime of 3 or more years in prison. 
A new requirement states that the concessionaires are obliged to cease any cooperation or link with all individuals or companies that are not considered suitable. This obligation seems to be in line with what, for instance, is found in Nevada Gaming Control Act (e.g., NRS 463.165-166). 

In addition, unsuitability of a concessionaire is now ground for the termination of the concession contract. 
Financial Capacity, Share Capital, Managing Director and Listing on Stock Exchange
Financial Capacity
In line with the current version, the requisite "financial capacity of the concessionaires" is maintained. However, it is now stated that the Secretary for Economy and Finance may request the dominant shareholders of the concessionaires to provide a guarantee to the fulfilment of the commitments and obligations of the concessionaires. In case there are no dominant shareholders – as defined in the Macau Commercial Code – the Secretary for Economy and Finance may demand to the qualified shareholders (5% or more of the share capital) of the concessionaires to provide such guarantees. 
Share Capital and Managing Director
It is proposed that the share capital of the concessionaires increased from 200 million Patacas (equivalent to USD 37.5 million) to 5 billion Patacas (equivalent to USD 621.3 million), having the operation of casino gaming as the sole business scope and a Macau permanent resident holding at least 15% of the concessionaire share capital as managing director (different from the current 10%). 
Listing in Stock Exchange
The proposal also states that the floating share capital of the concessionaires cannot exceed 30% of the share capital of the concessionaires. 
A duty to inform the Government once a qualified shareholder of the concessionaire is listed on the stock exchange has also been proposed. 
Corporate Social Responsibility
A new article 16 states the obligations that the concessionaires shall assume:
  • Provide support to the development of small and medium-sized enterprises;
  • Provide support to the diversification of local industries;
  • Ensure that labour rights are upheld – namely, those regarding in-service training and professional advancement of local workers – as well as maintaining the effectiveness of and guaranteeing access to a workers' welfare system;
  • Hire disabled or rehabilitated individuals;
  • Provide support to activities of public interest; and
  • Provide support to exchange activities in the educational, scientific, technological, environment protection, cultural and sports areas, among others.  
Payment of premium 
In relation to the annual premium, the proposal to amend article 20 states that the number of gaming machines will also be assessed in addition to the existing number of casinos, number of tables, games operated and location of the casinos.

For this purpose, it is also established a new mechanism which is the annual minimum gross revenue per table and gaming machine to be set by a dispatch of the Chief Executive. Whenever the gross gaming revenue does not reach this minimum amount established, the concessionaires will need to pay a special premium which will be the difference between the special gaming tax and the minimum amount per table and gaming machine. 
Duties of the concessionaires
An important feature is included in article 22. Besides the enlargement of the duties, the concessionaires are now subject to an assessment by the Gaming Inspection and Coordination Bureau (DICJ) of the fulfilment of the contractual obligations. In case the results of the assessment reveal a lack of proactivity or breach of the obligations, concessionaires are obliged to improve within a period to be fixed by the Secretary for Economy and Finance. 
Cancellation, extinction and termination of the concession
The Government may, under the proposal presented (article 45 – currently the title was only "extinction"), cancel the concession, after the advice of the Commission based on the following grounds:
1)    Termination due to threats to the national and Macau SAR security;
2)    Agreement with the concessionaire;
3)    Redemption;
4)    Termination due to non-compliance;
5)    Termination based on public interest;
6)    Lack of suitability of the concessionaire. 
As to the termination, the non-compliance with the amounts of investment and respective criteria stated in the concession contract is now a cause for termination. 
Scope of casinos
All casinos must be located in properties owned by the concessionaires with identification and clear demarcation of the following areas:
1)    Casino gaming;
2)    Treasury (cage); 
3)    Supervision, entry and exit, and ancillary areas;
4)    Carriage, deposit, storage and custody of chips and cash;
5)    Count room for chips and cash;
6)    Electromechanical, water supply and similar facilities;
7)    Sanitary installations;
8)    Logistic services. 
Number of gaming tables and machines
It is stated that there will be a maximum number of tables to be established by the Chief Executive and that any change to the number of tables should be authorized by the Secretary for Economy and Finance, taking into consideration several factors:
1)    The economic climate of the Macau SAR;
2)    Public Policy of the Government in relation to the gaming industry;
3)    Operational status of the concessionaires;
4)    The global state of the investment of the concessionaires, including in non-gaming projects;
5)    Utilization state of the gaming tables and machines.
It is also established in the proposal when the Secretary for Economy and Finance is entitled to reduce the number of tables, including when the minimum annual amount of gross revenue generated does not reach what is established by the Chief Executive.  
Foreign Gaming
Under the current concession and sub-concession contracts, concessionaires and sub-concessionaires arebound to inform the Macau government if they are engaged in any licensing process or contract to operate games of fortune or chance in any other jurisdictions, or when it operates games of fortune or chance, evenif such engagement is through a management contract ("foreign gaming activity").  

This duty of information whenever the concessionaire intended to operate in foreign markets will give place to the duty of requesting prior authorization from the Macau Government. 

The duty of information continues to apply once the concessionaires become aware that any of its directors, controlling shareholders, including the ultimate controlling shareholder, or anyone who, directly or indirectly, holds 5% (before was 10%) or more of its registered share capital enters into such foreign gaming activity. In addition, Government may mandate, in certain cases, that a certain shareholder of the concessionaire that is an operator in a foreign jurisdiction ceases to continue as a shareholder of the concessionaire. 
A new introduction is related to gaming chips. Concessionaires will be obliged to request authorization from DICJ when acquiring gaming chips, being the number of chips in circulation subject to the authorization of the Secretary of Economy and Finance. 

In addition, concessionaires are now obliged to guarantee in cash or form of credit the chips in circulation. 
Responsible Gambling
An important feature of the proposal relates to this matter, with the concessionaires obliged to have a comprehensive responsible gambling plan. Such a plan should include information on responsible and problem gambling behaviours, measures to prevent minors and legally incapacitated from entering the casinos, promotion of exclusion, creation of a specialized team to aid, as well as training on responsible gambling to the employees. 
The proposal contains several articles on administrative sanctions with penalties now well defined and stating that there will be criminal sanctions in the concession contracts. Fines vary from MOP 100,000 to MOP 5 million. 
The proposal to introduce amendments to the Macau Gaming Law is in line with the results of the consultation. 
It is now clear that, with some exceptions, the objectives stated in the consultation document will be put into law:
-       The number of concessions increased from three to six
-       The term of the concessions is now ten years
-       Several legal requirements that will increase the supervision of the concessionaires
-       Corporate social responsibility is now an important obligation for the concessionaires
-       Development of non-gaming elements is now linked with the number of tables to be authorized
-       It is explicitly stipulated the criminal liability and the administrative penalty regime.

Despite the fact that no surprises are expected, it is still possible to still fine-tune some of the articles and their wording to enhance the understanding not only to the operators but also of the public, including:
-       What corresponds to 30% of the share capital of the concessionaires that can be listed in the stock exchange;
-       The amount of premium and the liability of the concessionaires to pay when the minimum gross gaming revenue per table is not reached;
-       Define what constitutes a threat to national security and the security of the Macau SAR;
-       Possibility of having different management companies to manage different casinos. 

This important landmark now in full speed at the Legislative Assembly is only an additional step towards the sustainable development of the gaming industry. 

The outcome of the readings in the legislative body of the Macau SAR and the final version of the law will give us an idea of what to expect and how the operators can start preparing for the tender. 

One should not disregard that the concrete obligations, in line with the Macau Gaming Law, will be stated in the concession contracts.