Macau to Introduce Tighter Gambling Regulations This August

In another shift in Macau's gaming industry, a new law will come into effect on August 1, which introduces tighter regulations on the issuance of bet-credit within casinos. This legislation, unanimously passed by Macau's Legislative Assembly, marks a pivotal change in the operational dynamics of the region's gambling sector.

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The "Legal regime of credit concession for games of chance in casinos" bill, announced late last year, stipulates that only casino concessionaires will have the authority to extend gambling credit directly to patrons. This move effectively ends the longstanding practice of junkets, or gaming promoters, providing credit to gamblers, a method that has been integral to the VIP segment of Macau's gaming revenue.

For decades, junkets have played a crucial role in attracting high rollers to Macau's casinos, facilitating large credit lines and collecting debts on behalf of the casinos. However, under the new law, junkets will be prohibited from issuing credit and will only be able to request that a casino concessionaire extend credit to players they introduce. This arrangement will necessitate a notarized contract, subject to approval by Macau's Secretary for Economy and Finance, ensuring a higher degree of oversight and regulation.

The transition comes after a period of intense scrutiny on the junket sector, which has seen a dramatic reduction in numbers from over 200 licensed operators in 2013 to fewer than 19 as of February. The new law also includes a provision that could lead to the termination of a concessionaire's right to issue gambling credit if the Macau chief executive deems it necessary for public interest reasons. This clause adds an additional layer of governmental control over casino operations and could have significant implications for the industry.

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Changes Won't Have Major Impact

Analysts from Macquarie Equity Research suggest that the impact of the new bet-credit law on Macau's casino gross gaming revenue should be manageable. This assessment is based on the diminished scale of the junket sector and its reduced contribution to VIP gross gaming revenue.

Casino operators have been adapting to the changing landscape by engaging more directly with clients and converting junket VIPs to direct VIP and premium mass segments. For instance, SJM Holdings Ltd has been enhancing its marketing team, and Melco Resorts & Entertainment Ltd has increased its marketing investments to attract and retain high-value players.

The new regulations are part of a broader effort by Macau's authorities to reform the gaming industry, which has faced challenges related to financial risk and regulatory compliance. By centralizing the credit issuance process, the government aims to increase transparency, reduce the risk of financial crimes and ensure a more sustainable and responsible gaming environment.


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