Gaming | Scholar: Japanese competition might be limited to Osaka at first

Jorge Godinho

The seventh edition of the Annual Review of Macau Gaming Law was held last week at the Rui Cunha Foundation, with gaming law scholar Jorge Godinho reviewing major gaming-related developments of the previous 12 months.

Godinho, who was acting as event moderator, outlined several developments concerning gambling concessionaires ahead of their upcoming license negotiations and said that emerging casino projects in Japan were unlikely to hurt Macau’s economy, especially as competition might initially be limited to Osaka.

The gaming law scholar also introduced several local and international experts, who spoke on other topics, notably the rise of esports and sports betting in the United States, and the potential for Brazil develop a casino sector.

WYNN & GALAXY

On the Steve Wynn scandal and whether the fallout might influence his former company’s chances of acquiring a new license in 2022, Godinho said he agrees with the prevailing view among analysts that Macau will follow the lead of the U.S..

Steve Wynn resigned from his role as Wynn Resorts’ chairman in February this year, facing a slew of sexual harassment allegations. Only a month later he announced he would sell his entire stake in the company.

While most gaming observers see his resignation and distancing as conducive to the company’s prospects of acquiring a new Macau license, much will depend on what the U.S. investigations yield.

Even though the investigations are ongoing, “the discussion [about whether the sexual harassment claims are true] will never take place because it was stopped immediately before it could grow,” speculated Godinho.

“Does this case have implications for Macau? If nothing important happens on the U.S. side, then I would say that nothing will also happen on our side.”

Meanwhile, as Steve Wynn moved to unload his position in the company, rival Macau operator Galaxy Entertainment Group announced its acquisition of a 5 percent stake in Wynn Resorts.

“All I will say here is that it’s legal under Macau gaming law,” remarked Godinho on the matter. “The fact that it’s legal under Macau gaming law is the beginning, the middle and the end. This has always been possible under our law.”

“It obviously puts Galaxy in an important position if there [are] any M&A [mergers and acquisitions] in the future,” he added, but “the rest is speculation, in which I will not engage.”

MACAU JOCKEY CLUB

In February this year, to the surprise of almost everyone, the local government granted the Macau Jockey Club a new horseracing concession to last until August 31, 2042, predicated on a MOP1.5 billion investment commitment from the managing company to diversify its operations into non-gaming activities.

For Godinho however, “this was an expected development.”

“The [horse racing company] was losing money; either they close or there is a solution. The [racing] has existed for a very long time, so there was a plan to allow the company to finance its operation with other non-gaming activities,” he said.

“That’s probably the way to go because it would be sad if the horseracing operation closes. We know that the dogs [the Canidrome] are about to close, so if both close we would lose two concessions that have been operating [for decades].”

JUNKET LIABILITY

Regarding several cases from the last few years that involve the disappearance of large sums of money from junket operators, Godinho said that the courts came to a judgment late last year, even if it was rather insignificant.

He said that the courts “decided that, in general, there is liability of the concessionaire for the actions of the gaming promoter [junket]. But then, the court introduced a distinction, introducing the idea that liability only refers to acts that are at the core of the gaming promoting activities.”

Thus the issue of liability remains unclear and the cases are likely to continue. Moreover, appeals are still pending with higher courts.

THREAT FROM THE EAST?

Godinho also weighed in on the gaming developments across the East China Sea in Japan, where a bill allowing integrated casino-resorts is on the verge of passing.

“The [bill] is at this moment pending in the Japanese Diet. This may or may not be passed in this session, in the next three or four weeks,” said Godinho.

“After much speculation on the number of integrated resorts, [it has emerged that] there will probably be three, in Tokyo, Yokohama and Osaka. I expect that only Osaka can move forward quickly. Only Osaka has a clear idea of what it wants to do and has the political support [to back the plan]. So competition from Japan is mostly just competition from Osaka at the first stage.”

With only Osaka likely to be up and running in the immediate future, Godinho believes that the impact on Macau will be marginal, “similar to the impact of Singapore.”

There are other reasons too, he said, that Japan should not be seen as too much of a threat, even in the longer term. With just three casinos located in three different cities, Japan will not be able to rely on the ‘cluster’ model that has proved so successful in Macau and Manila.

Moreover, “along with the [casino] entry fee, and the high rate of taxation, [Japan] is turning out to be more restrictive than imagined a few months ago.”

Regarding Hainan, Godinho says that the fact that traditional games of chance will not be included in the island’s tourism offerings means it presents no immediate threat to Macau either.