Macau Ramps Up Casino Regulator Manpower
Macau is set to double the amount of gaming inspectors it has working across the casino industry in the special administrative zone. Also in this restructuring is the addition of an extra director to oversee the expansion. Macau has been on high-alert since the COVID pandemic took off, restricting many parts of its casino business model, requiring guests to pass through heat scanners, provide negative tests and socially distance whilst in the casino.
The special administrative zone of Macau, the world’s biggest casino hub, is ramping up the manpower within its regulatory agencies. The timing is interesting as it comes at a critical juncture when many of the largest casinos multi-billion dollar operating licenses are due to expire and renewal proceeding begin. ©ImageDragon/Pixabay
The news then is the world’s biggest gambling hub is set to double the number of regulatory agents that enforce the legal framework upon the participating casinos across the city. There are currently 192 such operators working in this capacity, and the number is set to double to 459 with a new director role embedded in the expansion plan.
These sweeping changes to how the city regulates its domestic casino neighbors couldn’t come at a more pivotal moment for the casinos themselves. Many of the multi-billion dollar casino regulation licenses are set to expire in just a few months’ time, and this critical juncture represents a huge going concern for some of these operators. It will be interesting to see what effect these structural changes to the regulator has on the application and processing of the license renewals.
Beijing has been ramping up the pressure on the industry for several years now, closing of financial and legal loopholes that benefitted casino operators in Macau for a long while. Particular attention and focus were given to junket operators who facilitated illegal foreign exchange services between the mainland and the city of Macau. All of this comes at a time when Macau is struggling for financial stability under the market forces inflicted by the COVID pandemic.
Macau Begins Stacking Its Regulator with More Investigators
The subliminal threat posed to casinos in the city by the regulator beefing up its workforce with double the amount of investigatory agents has sent shockwaves. There is a fear that Beijing is beginning to tighten its grip on an industry that has largely flourished and existed in an independent medium for over two decades. This structural change whilst seemingly small could spell new regulations and restrictions that casinos will need to navigate and ultimately pay for.
According to the city’s gazette, these structural changes are due to be implemented at some point in the next few weeks. So it is clear from the outset that speed is a priority for the government when it comes to increasing its capacity for supervision over the casinos operating in Macau. An official statement is yet to be submitted, but it is clear that the plans have already been formalized, and it remains just a matter of directing the correct person to their new roles and initiating a new operating model with twice the amount of investigators.
Of course, the timing of this structural change to Macau’s regulatory model couldn’t come at a more significant juncture. All of the city’s largest casinos currently operate within a tightly controlled licensing approval process. In the next few months, Sands China, Wynn Macau, MGM China and Melco Resorts will have to re-apply for a renewal of their multi-billion dollar operating license for the Macau special administrative zone.
There can be no doubt that the timing of the expansion of Macau’s regulatory manpower is related to the impending license expirations. Whether or not this poses an existential threat to the casino industry operating locally remains to be seen. But it can be already witnessed that tensions around Macau are high in anticipation of what might be coming down the line. Looking at Hong Kong which has had a lot of its individual liberties reigned in throughout the recent months, there are fears that Macau will be hit with the same kind of attacks.
China Moves Towards Tighter Controls Over Macau
Current trends in Macau suggest that Macau will continue to be a primary focus of the Chinese administration as it seeks to gain tighter controls over its business operations in foreign markets. China has explicitly targeted capital flows leaving the country for several years and remains vehemently opposed to junket operators that enable wealthy mainlanders to get their cash into offshore casinos. The existence of Macau, in the perspective of Beijing, is to generate wealth from foreign players, not encourage Chinese citizens to spend their money there.
China’s crackdown on junkets is nothing out of the ordinary. It has long been a feature of this region and continues to play a major role in China’s policy towards casinos. This hostile stance towards the junket operators of Asia has effectively broken the VIP casino experience revenue model that many of the smaller casinos in the city relied on.
The timing of these tighter regulations couldn’t come at a worse moment for the casino business in Macau. Still reeling from the aftermath of COVID fatigue in the market, footfall and gross gambling revenues are still down on seasonal trend forecasts. With the lack of international travelers coming into the city, gambling revenues are less than half of their levels during 2019, and this represents a major shortfall that the casinos are desperate to rectify.
