Gaming | Committee: Stipulation on concessionaires ownership of casinos ‘not new’

The requirement that gambling concessionaires need to operate in venues they own “is not a new introduction,” lawmaker Chan Chak Mo, president of the parliament’s Second Standing Committee, insisted yesterday.

While not a legal concept, “satellite casino” is a common term used to refer to casinos operated but not owned by a gambling concessionaire. The venue itself may be owned by the hotels that house the casino.

Chan explained that the existing law allows the current Chief Executive to use discretion with regard to the operations of “satellite casinos.” However, he then referred to the concession contracts to clarify the period during which a concessionaire must acquire or convert the ownership of such casinos.

“The law needs to be complied [with] and the contract respected,” Chan said. “The requirement is only moved from the contract to the bill.”

The committee president added that the government is considering the requirement “a matter of importance.”

“Converting the contractual requirement to legal stipulations implies public knowledge on the matter,” Chan said. The contract, due to commercial secrecy, is not publicly accessible.

The accountability of either the executive branch or the existing six gambling concessionaires in not abiding with the requirement stipulated in the law and their concession contracts was questioned.

In reply, the committee president insisted that the contracts are still in their validity period. Even if investigative or judicial procedures are required, they can only commence after the conclusion of the contracts.

The law allows the Chief Executive to extend the validity of the concessions for a maximum of five years.

In this case, taking SJM Resorts, S.A. as an example, they are required by the law and contract to either forgo or acquire their “satellite casinos” by the end of their current concession.

Nonetheless, as the concession is still valid, their operation of such casinos is still legal and justified. As long as they complete the acquisition, it will be considered legal. With that said, any procedures aiming at holding any entity responsible can only start after the cessation of the contracts.

As Chan put it: “Maybe [the concessionaire and satellite casino owners] have been in discussion for [a] long [time] and can wrap up the deal [of acquisition] in three days. Who knows?”

Furthermore, Chan said that he was not certain whether the government has reminded the concessionaires about the requirement in the contract, but he insisted that whether or not the reminder occurred, the requirement is still there.

The bill proposes a three-year buffer period for concessionaires to resolve any ownership matters before the government retrieves the premises. Ultimate ownership of all casino venues, under the bill, belongs to the government.

Yesterday’s committee meeting, according to Chan, still primarily focused on “satellite casinos,” regarding issues such as their effect on employment and supporting the neighborhood. Some lawmakers were also concerned with potential complications if subdivision is not applicable for certain hotels.

Legal advisors of the parliament also expressed their confusion regarding the division of labor – seen by them as overly detailed – with the authorities over gambling-related matters.

The bill also proposes that marketing middlemen businesses must be operated by commercial entities instead of natural persons. However, as the Commercial Code allows sole proprietorship, the parliamentary committee found the proposal unclear.

Government officials will be invited to the parliament to give clarifications at a later date, Chan said.