Is phone betting/ proxy betting legal in Macau?

Published in: Latest Intelligence  

By António Lobo Vilela *
 
Is phone betting/ proxy betting for casino games of chance currently legal in Macau?
The short answer is no.
Phone betting/ proxy betting is a system that allows patrons outside the casino premises to place bets through a phone, by proxy.
Under Macau law, phone betting/ proxy betting for casino games of chance is a form of interactive, or remote gaming.
Law 16/ 2001 (Macau Gaming Law) defines interactive games as the games of chance in which: (i) a prize in cash or equivalent is offered, or may be won in the terms of the respective rules, (ii) a player enters or participates in the game via telecommunication means, namely phone, fax, internet access, data network, transmission of video signals or digital data, making or agreeing to make payments in cash or equivalent; and (iii) the game is equally offered, or approved as a game of chance, or as a gaming machine game in the Macau casinos.
The commercial exploitation of every modality of gaming in Macau -- casino games of chance, pari-mutuel betting, operations offered to the public and interactive gaming for casino games of chance -- is reserved to the Macau Special Administrative Region and can only be carried out by an entity other than the Macau SAR by means of a concession.
As of today, the Macau SAR has not granted any concession for interactive [or remote] gaming for casino games of chance, thus the exploitation of any type of interactive games is illegal.
The Macau Gaming Law also specifically states that a casino gaming concessionaire cannot exploit any type of interactive game and asserts that the concessions to exploit interactive games are autonomous from those for casino games of chance.
Reflecting this legal injunction, the gaming concession/ sub-concession contracts stipulate that the concession/ sub-concession granted for the exploitation of casino games of chance does not cover the exploitation of interactive games, i.e., such exploitation is outside the scope of the said concession/ sub-concession.
In fact, by the time the draft bill proposal of the Macau Gaming Law was discussed in the Macau Legislative Assembly, there was a clear intention to not only relegate the legal regulatory framework on interactive [or remote] gaming for casino games of chance to a later stage, but also to prevent the casino gaming concessionaires from exploiting interactive games.
The initial draft bill proposal of the Macau Gaming Law submitted by the Macau government to the Macau Legislative Assembly provided not only for the possibility for casino gaming concessionaires to be awarded an interactive [or remote] gaming concession, but also for the grant of a priority right to that effect. Yet, those provisions were removed from the final draft bill proposal submitted following discussions with a Legislative Assembly commission that was specially set up to analyze the draft bill proposal.
This said, the exploitation of interactive games by the current casino gaming concessionaires/ sub-concessionaires is a clear violation of the Macau Gaming Law, as well as of the respective gaming concession or sub-concession contract, being an unlawful practice.
When it comes to consequences there is a probable direct, negative and adverse impact on the continuous and permanent assessment conducted by the Macau gaming regulator on the suitability of casino gaming concessionaires/ sub-concessionaires, its qualified shareholders, directors and key casino employees. Aside from that, such a violation is deemed as an administrative infraction.
So far there is no pecuniary penalty for such an infraction, since no administrative regulation dealing with administrative infractions for violations of the casino gaming legal regulatory framework has been enacted, despite the mandatory precept for such enactment enshrined in the Macau Gaming Law.
It may however trigger the unilateral termination of the gaming concession/ sub-concession by the Macau SAR on the grounds of a violation of fundamental legal and/ or contractual obligations, in particular the obligation to exploit the concession/ sub-concession in the terms and conditions set forth in the gaming concession/ sub-concession contract, which expressly bans the possibility of exploiting interactive games.
In fact, one of the grounds specially and expressly stated in the gaming concession/ sub-concession contracts that may lead to the unilateral termination by the Macau SAR is the deviation of the gaming concession/ sub-concession scope by way of the exploitation of unauthorized games.
The unilateral termination of a gaming concession/ sub-concession is one of the forms of extinction of the concession/ sub-concession. It leads to the immediate reversion of all casinos and gaming equipment to the Macau SAR and carries for the gaming concessionaire/ sub-concessionaire a contractual duty to indemnify the SAR.
The Macau government may also resort to the first demand autonomous bank guarantee provided by the gaming concessionaire/ sub-concessionaire to guarantee, inter alia, the exact and prompt fulfillment of all legal and/ or contractual obligations to which the concessionaire/ sub-concessionaire is bound.
On the criminal side, under the Law on Illicit Gaming the exploitation – in casinos – of interactive games by an entity not holding the proper legal entitlement, in casu a concession granted by the Macau SAR to that specific effect might be configured as a criminal offense punishable with up to 3 years imprisonment or with a pecuniary penalty.
Furthermore, the impossibility to identify the ‘real’ patron placing the bets through the phone/ by proxy raises significant AML concerns and does violate the AML legal regulatory framework currently in force, in particular the KYC rules. The violation of these constitutes an administrative infraction sanctioned with a pecuniary penalty ranging (for legal persons) from MOP$100,000 ($12,820) to MOP$5,000.000 ($640,000) or equivalent to twice the economic benefit obtained in case this benefit exceeds MOP$2,500.000 ($20,000).
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1. For further reading on interactive (or remote) gaming for casino games of chance and other gaming modalities in Macau, see Carlos Lobo and Antonio Lobo Vilela, Chapter 42 - Macau, "Internet Gambling Report - An Evolving Conflict between Techology and Law", Eighth Edition, Mark Balestra (Editor) and Anthony Cabot (Founding Editor), River City Group, p. 615.
 
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* António Lobo Vilela is an AGB Advisor, Partner at LVT Lawyers and former legal advisor to the Macau Gaming Commission

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