The revisions to the Macau gaming law that accompanies the renewal of the six gaming concessions continues to be fluid. Several quirks in the process were revealed this week as the deadline of late June approaches for the passage of the bill.
The 18 “satellite” casinos that are operated under the licenses of the concessionaires—14 by SJM and three by Galaxy and one by Melco—were given the impression early on during the revelations of the new gaming law that their operations would be forced to close after a phase-out period of three years. But last week, the Second Standing Committee of the Macau Legislative Assembly, which is conducting hearings on the bill, said the satellites could continue to operate beyond the three years, but in a different financial structure.
The president of the committee, Andrew Chan Chak Mo, said the operations could continue after three years but would not be able to use the revenue-share model employed in the last 20 years. It’s questionable if that could be used during the three-year phase out period and beyond. According to Inside Asian Gaming, Chan was short on details. While the satellite casinos would not be required to be owned by the concessionaires, the operators would no longer be allowed to share gaming revenues. What the new financial model for the satellites is unclear.
“That is a matter to be determined by the terms of the contract between the concessionaire and the management company” operating the satellite casino, said Chan, without discussing the regulations controlling those terms.
The committee also suggested that the Macau casinos could be offered a tax break on revenues gaming from “foreign” gamblers—such as non-Chinese gamblers—who could be drawn to Macau.
According to Chan, “The government hopes the concessionaires will start recruiting foreign customers. If they bring in foreign customers who contribute to the gaming tax collected by the Macau government, the government can, based on its data and the advice of the Gaming Commission (CESJFA), decide how much to reduce the tax by.”
The CESJFA is a tourism organization that conducts research and advises the government on polices, and includes the office of the chief executive; the secretaries for economy and finance, administration and justice, security and transport and public works; the director of (gaming regulator) DICJ and other senior government officials.
A tax credit for foreign visitors is not unusual in Asia. Several countries, including Singapore, Vietnam and Australia feature a lower tax rate on visitors from other countries. But for those jurisdictions, other countries include China, which has the most robust group of gamblers in the world. That group is not eligible for a lower tax rate in Macau.
The total tax rate in Macau is 35 percent, which rises another 4 percent to 5 percent via various add-ons and fees. Chan said the chief executive could waive this additional fee should Macau casinos attract enough foreign visitors.
Chan parroted the SAR’s commitment to attracting foreign visitors.
“Macau’s positioning is to be a world center of tourism and leisure,” he said. “Now it is time to expand into other, foreign markets.”
