Macau gambling industry review finds casino operators fulfilled all commitments

[May 11, 2016]  HONG KONG (Reuters) - The government of Macau on Wednesday said all casino operators in its territory had fulfilled commitments agreed in initial contracts signed over a decade ago, marking the culmination of a year-long review into the impact of the gambling industry.

But the government said it would tighten regulations for junket operators - promoters that bring high-rolling gamblers to casinos - and that its regulator had started an investigation in February to ensure accounting compliance.

Macau is the world's largest gambling hub by revenue, and is the only territory in greater China where casinos are permitted. But it is so dependent on gambling - which brings in over 80 percent of government revenue - that it is trying to diversify.

Authorities have also increased regulation over the past two years, coinciding with a central government campaign against ostentatiousness among public officials. Over that time, gambling revenue has plummeted to five-year lows and monthly revenue has dropped by over half since the start of 2014.

The review was widely seen by analysts, investors and industry executives as a window into how authorities viewed the operators ahead of license renewals starting in 2020.

In the review, the government acknowledged the contribution to boosting economic growth by operators Sands China Ltd, Wynn Macau Ltd , Galaxy Entertainment Group Ltd, Melco Crown Entertainment Ltd, SJM Holdings Ltd  and MGM China Holdings Ltd.

It said they each met commitments including creating upward mobility for employees and diversifying gaming revenue. The government said non-gaming elements generated income of 23.2 billion patacas ($2.90 billion) in 2014.

"Currently, total non-gaming spending of tourists in Macao is comparable to that of Las Vegas. However, the percentage is diluted as Macao's gross gaming revenue is far too high," the government said.

On junkets, the government said initial findings suggest increased awareness of compliance since the Gaming Inspection and Coordination Bureau (DICJ) began its investigation. It said the regulator had visited about half of junket operators - over 80 - and that the investigation will be completed in six months.

The regulator is also working with the industry to establish a central credit database to minimize credit risk. The industry is riddled with bad debt as there is no formal mechanism for claiming from gamblers in China as casino debts are illegal.

(Reporting by Farah Master; Editing by Christopher Cushing)

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