The major reform of gambling laws in Macau might include some unexpected results. In the future, casino chips may not hold the same value in accordance with accepted industry definitions.
Macau is on the verge of entering an entirely new era. Where casinos were once the major lifeline, the Chinese Special Administrative Region (SAR) wants greater diversification. New gambling laws will arrive in the city very soon, and some of them may not be as welcome as others.
There is already a belief that, in addition to imposing more restrictions on gaming concessionaires, companies across the board may have to pay more taxes. However, a new analysis of the gaming market by Andrew W. Scott and Inside Asian Gaming (IAG) points out that Macau lawmakers may be performing a magic trick with casino chips.
Scott highlights that “money on deposit is an asset” of the gambler who puts up those funds. That same money, on the other hand, becomes a liability for the casino or other gambling facility. Those two terms – deposit and liability – become strikingly important in Macau’s new gambling laws.
Going forward, junkets serving Macau, if there are any left, will no longer be able to hold any player funds – only concessionaires will have that capability. This was an expected outcome of the changing paradigm in the SAR. However, comments made by Andrew Chan Chak Mo last Friday were not expected.
Macau Casino Chips Lose Intrinsic Value
Chan is the chairman of the Macau Legislative Assembly Second Standing Committee, which is reviewing the gambling reforms. He explained that casino concessionaires can “accept deposits” from gamblers and assume the resulting liability.
Scott, along with IAG’s Ben Blaschke, finds the wording more than a little suspect. The action of exchanging cash for casino chips will be the same, in the legal sense, as making a deposit.
What the government is saying, in essence, is that under its revised gaming law, chips do not effectively act as ‘cash on the casino floor’ anymore; they are merely ‘receipts for deposits at the cage.’ This is a seismic shift in thinking that promises to have significant ramifications,” stated IAG’s Andrew W. Scott and Ben Blaschke.
This is significant for several reasons, but one stands out above the rest. Casino chips are money. Patrons use them to purchase all kinds of amenities in casinos – food, drinks, entertainment, retail purchases and more.
Under the new definition, Macau casino chips are not “owned” by the gambler while they’re in his or her possession. They are, for legal purposes, property of the casino at all times. The gambler will simply receive a receipt for “money on deposit,” just like at a bank.
Why It Matters
Most people may think that this is only a matter of semantics. However, in the legal world, semantics is the difference between winning and losing. In the case of Macau’s new chip definition, the problem with the new definition becomes abundantly clear.
Once the new casino concessions enter into effect at the beginning of next year, casino operators won’t own the equipment or the properties anymore. They will essentially “lease” all of it from Macau for the duration of their concession. As such, all of the gaming equipment, real estate, fixtures – and even chips – belong to the government.
However, there’s a potential situation the SAR may hope to avoid by rewriting the book on chips. If a current concessionaire leaves – an unlikely but possible scenario – and hands over the keys to the castle to Macau, the city becomes liable for all of the chips.
Should a gambler squirreling them away at home for years decides to cash them in, Macau would have to pay up. The new definition clears it to reject any claim, allowing it to send the gambler to the “company [that] accepted” the money on deposit to begin with.
To that end, Macau lawmakers have also covered themselves. If that primary issuer no longer exists, the city has a backup plan. The new gambling law specifically states, “Shareholders with an amount equal to or greater than 5% of the share capital of the concessionaires, directors, and members of the management body are jointly and severally liable for all debts of the concessionaires, including in particular the chips in circulation.”
In other words, virtually anyone with ties to that concessionaire would be responsible for paying out any claims on chips. The new Macau will be a lot different than its current form two years from now.
Sonny Lo, the author of “Casino Capitalism, Society and Politics in China’s Macao,” said it best. He predicts, “Beijing will clean the whole casino industry.”
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