The Gaming Industry of Macao

11:16, December 15, 2009      

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Gaming industry has a long history in Macao and it was first legalised in mid 19th century. Entering the 21st century, the gaming industry has developed a very close relation with the tourism industry and become a pillar of Macao's economy. It has also earned Macao an appellation of "Monte Carlo of the Orient".

In the fourth quarter of 2008, the gross revenue of the gaming sector amounted to MOP24.36 billion (USD3.05 billion). The sector contributed MOP41.90 billion (USD5.24 billion) in direct tax to the MSAR in 2008.

From Monopoly to Liberalisation
In 1962, the Sociedade de Turismo e Diversoes de Macau (STDM) was granted the casino concession. After a number of extensions, the monopoly expired on 31 December 2001. Under the contract, STDM paid a gaming tax to the Government annually. In 2001, the tax rate, which had been amended several times, was 31.8% of the total revenue of the concessionaire. In the 1990s, half of the Government’s annual income came from gaming tax, which accounted for one-third of total GDP. In the last few years of STDM’s monopoly, the company’s gross gaming revenue varied from MOP13 billion to MOP18 billion and the gaming tax from MOP4.2 billion to MOP5.9 billion.

Other than casino table games, gaming activities in Macao also include horse-racing, greyhound-racing and pacapio lottery. Instant lotteries and soccer betting are becoming increasingly popular in recent years.

After its establishment, the Government of the Macao Special Administrative Region (MSAR) decided to liberalise the gaming industry once the STDM concession expired. The Government’s objectives were to introduce competition in the industry, increase employment and consolidate Macao’s position as a gaming centre in the region.

As the gaming industry played such a crucial role in Macao’s economy, the whole process of liberalisation, including the establishment of an advisory committee to study the development of the gaming industry, the appointment of a consultancy firm for more in-depth research and the introduction of relevant laws, by-laws and bidding procedures, was conducted prudently.

Formulation of Regulations Governing the Gaming Industry
In August 2001, the Legislative Assembly officially passed Law No. 16/2001: Gaming Industry Regulatory Framework. The framework not only clearly defined the meanings of “casino” and “gaming”, it also laid out regulations for concessions system and the conditions and process for bidding.

After the Gaming Industry Regulatory Framework was passed, the Government introduced a series of related by-laws to supplement the law and established a task force to coordinate related duties.

The Casino Concessions Committee, established by an Executive Order on 31 October 2001, was responsible for the work related to tender invitation and bidding. It also advised the Chief Executive on concession matters. The eight-member committee was chaired by the Secretary for Economy and Finance, Mr Francis Tam Pak Yuen.

The bidding process was officially begun on 2 November 2001. The Casino Concessions Committee, which operated at the office of the Gaming Inspection and Coordination Bureau, started to give investors information and receive proposals from investors. By 7 December 2001, the deadline for bidding for the casino concessions, the committee received 21 tenders from bidders from Macao, Hong Kong, the United States of America, Malaysia and other countries and regions.

Three Concessionaires Granted Casino Concessions
After taking the report submitted by the Casino Concessions Committee into consideration, particularly its conclusions and suggestions, the Chief Executive issued an Executive Order to grant provisional casino concessions to Sociedade de Jogos de Macau (a subsidiary of STDM), Wynn Resorts (Macau) and Galaxy Casino Company.

The MSAR Government signed the Concession Agreements on Operating Games of Luck and Other Games in Casinos in the Macao Special Administrative Region with Sociedade de Jogos de Macau in March 2002, and with Wynn Resorts (Macau) and Galaxy Casino Company three months later.

By the end of the fourth quarter of 2008, there are 31 casinos in the Macao SAR.

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