In September, Macau has begun a 45-day public gaming consultation, a precursor to likely tighter regulations. The same month, Reuters reported shares of Macau casino operators shed as much as a third of their value, around $18 billion, shocked by these regulatory developments.
It added that Hong Kong stock analysts almost immediately downgraded their view of near-term prospects for casino operators in the Chinese special administrative region, who must all rebid for licences when current permits expire in June 2022.
China is believed to be growing wary of the outsized reliance that Macau places on gambling, and it previously took steps to cut off the flow of funds from the mainland, where gambling is illegal.
Rui Pinto Proenca, managing partner of MdME Lawyers, and senior associate Carlos Eduardo Coelho tell ALB that it’s currently too early to tell what impact the proposed regulatory changes in Macau are likely to have on casino operators working in the market as the current gaming law revision process and proposal document lacks a number of key details.
“This means that the proposed regulatory changes may simply incorporate changes that the market was expecting and preparing for or, instead, depending on the extent of some measures broadly enunciated, may have significant implications to the Macau casino market as we know it today,” Proenca and Coelho say.
But they are certain that there will be impact. “The stock markets have already reflected a very negative perception of the pending changes”, they note. As a result, the stakeholders in the Macau gaming industry are likely to look to the future with some apprehension.
Reuters reported that the consultation covers nine areas, such as the number of licenses, better regulation and employee welfare, as well as having government representatives to supervise daily casino operations. It added that the government also plans to increase voting shares in gaming concessionaires for permanent residents of Macau, as well as more rules on transfer and distribution of profits to shareholders.
“All these matters and will surely have an impact, which shall be more or less felt depending on the final changes to the gaming law and the conditions for the international public tender,” Proenca and Coelho say.
Despite a lack of clarity, the lawyers say that businesses can prepare for likely changes — and challenges — in a number of ways.
“From a more immediate approach, Macau gaming operators should be ready to proceed to relevant corporate changes to their structures, re-think their organization and management to comply with all the stringent supervisory obligations the current gaming law revision proposal document hints shall be put in place and should start thinking out of the box on new and innovative ideas (in line with Macau Government intentions) to diversify its offerings and decrease the reliability from gaming source revenue,” Proenca and Coelho say.
But for a more medium to long-term approach, Macau should be prepared, the lawyers say, for a continuous government effort to diversify the economy and decrease reliance on its gaming industry. They note that from a legal perspective, “the market should be ready — and by ready this also means preparing the future generations of legal practitioners — in the areas the government is focusing on.”
Among these are the financial services industry, international arbitration and increased integration with the Greater Bay Area, “all areas that shall require and increase number of qualified legal experts,” Proenca and Coelho say.
All these changes will likely herald more legal work, say Proenca and Coelho, noting that at the initial stage, the focus will mainly be advisory work.
This will be “advisory work to gaming concessionaires, direct or indirect shareholders and respective investors, who want to understand the impact of the current gaming law revision process to their investments, but, obviously, also to the stakeholders directly affected by the proposed changes,” the lawyers say.
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