By Luis Mesquita de Melo (MdME Lawyers)
Over 10 years after the gaming market liberalization in the Macau Special Administrative Region, the Macau Government has for the first time enacted, in the form of an Administrative Regulation, a set of rules concerning the approval of gaming manufacturers, electronic gaming machines and related equipment and gaming systems being supplied to the Macau market.
Administrative Regulation 26/2012 (approved on November 16, 2012) was published in the Official Gazette on November 26, 2012, and came into force on the following day, November 27, 2012.
The legal definition of gaming equipment under the scope of Administrative Regulation 26/2012 includes all devices, programs or software that operate totally or partially by electronic and/or mechanical means and are conceived, adapted or programmed to run or store games of chance in which the player may receive a payment in cash or in equivalent tokens or values as the result of a bet placed.
The supply of slot machines and related equipment to the gaming concessionaires and sub-concessionaires, as well as slot machine distributors, is from now on reserved to approved (licensed) manufacturers. The responsibility to approve the gaming manufacturers, conduct suitability checks and to approve the electronic gaming machines and related systems and equipment being supplied in Macau lies with the Gaming Inspection and Coordination Bureau (DICJ), the gaming regulator in Macau.
There are four main principles that shape the legal framework of the new slot machine regulations: (i) the institution of an approval/licensing procedure for all gaming manufacturers doing business in Macau, (ii) a gaming manufacturer corporate suitability check, (iii) an approval process for all the slot machines and related equipment being supplied in Macau, and (iv) a set of ongoing regulatory compliance obligations imposed on the gaming manufacturers.
Any gaming manufacturer wishing to supply slot machines and related equipment to the gaming operators in Macau must be approved in advance by DICJ. This means that Administrative Regulation 26/2012 has indeed established, for the first time, a direct regulatory relationship between the gaming manufacturers and the Macau gaming regulator (DICJ). Prior to the adoption of the Regulation, everything concerning the supply, approval and installation of slot machines was processed with DICJ through the six gaming concessionaires and sub-concessionaires.
In order to be approved/licensed as a gaming manufacturer by DICJ, an initial request must be submitted together with required detailed information that includes, but is not limited to: (i) the list of jurisdictions where the gaming manufacturer is authorized to do business, (ii) the certification by the jurisdiction elected as the main jurisdiction that the license is valid in that jurisdiction and that there are no pending administrative procedures against the gaming manufacturer for violations in the previous 12 months, (iii) description, by jurisdiction, of all models of slot machines that the gaming manufacturer is authorized to supply, install, program and maintain, (iv) the organizational chart of the gaming manufacturer and of all its shareholders, with 5% or more of the share capital, up to the ultimate shareholder, and (v) the composition of the gaming manufacturer corporate bodies.
The licensing procedure of gaming manufacturers involves a suitability check on the applicant and its shareholders and directors. The suitability check may, however, be waived following a request to that effect if the gaming manufacturer is already licensed in one of the following jurisdictions: Nevada, New Jersey and Mississippi in the United States; Australia; New Zealand; Great Britain; or Singapore.
Crafted with a considerable influence from the Australian model, after a long legislative process initiated back in 2004/05, only time will tell if the legislative options materialized in this gaming regulatory enhancement will actually provide for a more credible and transparent gaming market regarding the supplying of electronic gaming machines. At the end of the day, the success of the new regulations will depend mostly on the way they will be enforced.
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