New research from Macao Polytechnic University says the city’s crackdown on satellite casino operations is not unwarranted, as the satellites are “fraught with opacity and undesirable business practices” and in need of more “transparency, legal certainty and … oversight.”
According to Macau Business, the report by Professor Ryan Ho Hong Wai of the Centre for Gaming and Tourism Studies looked at satellite properties in 2018 and late 2021. Satellite casinos usually refer to gaming halls that are technically operated by subconcessionaires but are owned and promoted by third parties who are also involved in day-to-day management. The news outlet actually likened them to “casino franchises,” which enabled concessionaires to expand their market reach and spread operational risk.
“By ‘franchising’ their subconcessions to third parties, subconcessionaires can rely on service providers and their social networks to reach a diverse pool of patrons they might otherwise miss,” according to the report, to be published in a forthcoming issue of the Gaming Law Review.
Currently, there are 18 satellite casinos in Macau; 14 run under the license of SJM Holdings Ltd., while the other four are linked to Galaxy Entertainment Group and Melco Resorts and Entertainment Ltd.
“Most satellite casino owners are local and Hong Kong-based entrepreneurs,” Ho wrote, “but their casino management experience and credentials have largely been unknown to the public. There have been no specific regulations governing their suitability, financial capability, casino experience, and other regulatory standards.”
He said the satellites have long been seen as a “regulatory loophole” of the local gaming sector, a loophole that should be closed in the interest of compliance.
“Effective regulation of the gaming industry cannot be achieved without resolving the legacy issue of satellite casinos,” he continued. The city’s newly amended draft gaming law would require casino properties owned by independent investors to be either permanently closed or acquired by the six prospective concessionaires, with a three-year grace period in which to make the transition. Ho believes the law, if adopted “is likely to dissolve the deep-seated satellite casino system and mark a turning point for any third-party involvement in casino gaming.”
Chinese language newspaper Macao Daily News reported on March 24 that seven satellite casinos are planning to close by mid-year due to the tightening of visa applications to Macau, lack of cash flow and the negative impact of the repeated pandemic outbreaks as well as the threat of closure under the new law.
Four of those casinos have been linked to Chan Meng Kam’s Golden Dragon Group, while Emperor Entertainment Hotel Ltd. recently announced that the casino located in its Grand Emperor Hotel will cease operations as they will not renew the service agreement with gaming concessionaire SJM set to expire on June 26.
The company cited “the gloomy outlook of the high-end gaming segment” as a reason to not renew the service agreements with SJM, while the hospitality business in the Grand Emperor Hotel will remain operational.
Some 500 employees in the casino could be affected by the decision, and the Macau Labour Affairs Bureau (DSAL) says the gaming concessionaire in question has the duty to take the necessary diligence to safeguard the rights of dismissed workers.
“The DSAL is very attentive to the case and has already contacted the hotel and the gaming concessionaire, to follow up on the matter as soon as possible,” the department said in a note.
The department added that it will inform affected workers about their rights and organize employment seminars that help them in the job search.
“Many people are worried that they will not be able to keep their jobs,” said lawmaker Ella Lei, who also urged the casinos to fulfill their corporate social responsibility by continuing to employ the satellite workers.
Meanwhile, gaming companies such as Macau Legend, responsible for several satellite casinos at Macau Fisherman’s Wharf under SJM’s license, have already stated their intentions to apply for a full license in the upcoming gaming tender period.
