AVIS – Pandora’s Box | Macau Affairs
Macao Affairs | december 2021
By António Lobo Vilela
Like everything else, Macau’s gaming ecosystem also has vulnerabilities, some internal, some external.
The recent “Dore case” in which the decision of the Court of Final Appeal upheld the decision of the court of second instance that game operators are jointly and severally liable for the reimbursement of funds on deposit with game promoters revealed a loophole of the internal system and opened a Pandora’s Box. .
We agree with the orientation of the decision of the Court of Second Instance. To quote us, the operators of casinos are the “entities best placed, for reasons of physical proximity, to, in the first place, supervise the“ activities carried out in the casinos ”by the promoters of games. “Based on the system that applies to (horse racing) bookmakers, the current” exclusive (civil) accountability system “for casino operators results from culpa in eligendo, resulting in a bad choice linked to the promoter of games whose register for the exercise of the activity has been accepted, or of culpa in vigilando, for failure to monitor “activities carried out in casinos” by the promoter of the game. “[i]
The decision is “crucial for the Macanese gaming ecosystem and the way it is structured”,[ii] although the extent of the problem cannot be identified immediately, as no figures exist on funds on deposit with game promoters.
What lessons can we learn from the Court’s decision?
First, the operation of independent cages by game promoters should be approached and rethought by the Macau government, considering whether all transactions made should be solely under the responsibility and control of the casino operator.
Second, the Bureau of Inspection and Coordination of Games (DICJ) should be (far more) proactive and apply more rigor to the application expected of the government agency “responsible for (…) regulation, supervision and coordination of gaming operations and gaming Activities. ”Several“ burglaries of game promoters ”have taken place and since at least 2014, the DICJ has stated that receiving funds on deposit in VIP rooms“ is an activity carried out by those who are not specifically authorized to do so, and as such, it is illegal. “
Third, the legal and regulatory framework must be a living, evolving structure and not something to be kept crystallized. More than ever, the announced (several times) in-depth review of the game promotion regulations is of the utmost importance.
Finally, an overhaul of the relationship between casino operators and game promoters is needed, as latent financial risks can outweigh the perceived profitability of VIP games. Casino operators need to be firmer in enforcing supervision of game promoters registered with them, including imposing minimum internal control rules or compliance policies. In addition, contracts with game promoters should be more detailed to include indemnification clauses against illegal activities, and require specific types of guarantees or the creation of mandatory cash provisions.
The People’s Republic of China (PRC) considering clamping down on capital flows by expanding restrictions on offshore gambling, which in conjunction with the COVID-19 pandemic (exacerbated by Macau authorities’ persistence with COVID-zero policy), has put and will definitely continue to put a strain on the decadent (but still important VIP gaming segment in terms of gross gaming revenue generated). The recent arrest warrant issued to the founder and CEO of Suncity Group by the Wenzhou Public Prosecutor’s Office of the PRC over alleged cross-border gambling activity is yet another setback the proportions of which only time will tell.
All of these externalities mixed together form the perfect mix that can ultimately lead to the need to remake Macau’s gaming industry from scratch.
Taking into account the lower number than ever of references in the political address of more than 109,000 words for 2022 Report to the words “casino” (14, not counting the 4 times it has been used in the full name of the law on games) and “gambling” (50, not including the 7 times it has been used in the name DICJ), one wonders if Macau’s gaming industry is really too big to fail and too big. to play with?
[ii]SeeAntonio Lobo Vilala, The liability of Macau casino operators for activity rendered inside casinos by game promoters (junkets) – An update on the ongoing litigation, Gaming Law Review, March 2021, 66-75.