The life and death

of a gaming concession
Jorge Godinho
Visiting Professor of Gaming Law
at the Faculty of Law and Faculty of Business
Administration, University of Macau

jg.macau@gmail.com

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Note: This text is fictional. Any similarity to the present or

past reality of Macau, Japan, Singapore or Portugal is a
mere coincidence.
[last revised 29 June 2019]

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A gaming concession, like anyone, has a life cycle.

At its origin is a decision to legalize the operation of
gaming, taken by a certain jurisdiction. Such decision is
usually a very difficult step, adopted among doubts, fears and
protests. It is often a tough choice, an option that is almost
always forced by a harsh economic reality that typically
includes a recession or a full-blown crisis involving severe
difficulties in financing the public coffers and in balancing
the budget. During bad times “abnormal” things happen,
which otherwise would never see the light of the day. The
rates of existing taxes are increased, new taxes are

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introduced, and brand new sources of revenue have to be
discovered — for example in the field of gaming, which
therefore, reluctantly, will come to exist.
Not that the demand for gaming was absent. Gambling
has always existed: if it is not formally legal, it is offered
illegally by criminals. It is therefore much more rational to
have this problematic business offered transparently, in a
controlled environment, with proper regulation that will
attempt to limit the downside as much as possible. And, of
course, with interesting levels of taxation.
Thus, among moral doubts, and under the weight of
financial needs, the debate towards the legalization of
gaming gets underway. It is necessary to overcome the
recession, boost the economy, create jobs, leverage tourism
and, above all, obtain desperately needed tax revenue.

II

The concept of a gaming concession begins to take

shape. Studies and economic forecasts are prepared; models
and detailed options are discussed. Where can the operation
be located? What investments will be required? Who may
operate gaming? On what terms and conditions? How is
suitability going to be checked? Is smoking going to be
allowed in gaming areas? How about credit for gaming and
junkets? How to prevent money laundering? How much is
the tax rate going to be? How is the gross gaming revenue
going to be checked? And will the public support this
novelty?
It is proposed to create a monopoly concession, to be
awarded to the winner of an international public tender
process. The concessionaire will have to make massive
capital investments within a certain deadline, and the new
operation will greatly increase tourism and the local
economy. Build it and they will come.
Everything starts to accelerate. Large international
gaming companies wake up to the new emerging market and
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make favorable public statements. Now suddenly everyone
has plenty of opinions on what should be done. Lobbying
starts. Articles appear in newspapers and magazines.
Speeches are made in specialized conferences about how the
new jurisdiction should regulate gaming. Ideas are floated
about how much should be taxed, how the supervisory body
should be structured, whether joint ventures should be
required, and many other topics. In order to facilitate the
approval and gain public support, politicians talk only about
the opening of ‘integrated resorts’ and never about ‘casinos’.
The future operation is not going to be simply a casino; it will
offer all kinds of experiences.
The companies interested in the gaming concession
position themselves firmly. They start by opening a
representative office and then proceed to organize shows,
sponsor artistic events and do everything they can to
demonstrate to the locals how much they can do, including
for the local culture. With them, the future will be brilliant.
The pinnacle is reached at conferences where the many
interested companies present ambitious architectural
projects of the future ‘integrated resort’, which will create an
unstoppable, extraordinary, unprecedented tourist
attraction effect.
The process progresses steadily, but sometimes with
delays. The local politicians try to educate themselves on the
specific technicalities of the gaming sector, in order to make
the best decisions. Some are against all forms of gambling.
After long debates, reports, public consultations and
complex negotiations, parliament overcomes the opposition
and passes the necessary laws. Soon after, the Government
prepares the regulations and detailed specifications. Gaming
is really going to happen.

III

An international public tender process is launched soon

after. It is the moment of maximum speculation and
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enthusiasm, but also nervousness. Teams work around the
clock to get the proposals ready.
On the last day of the deadline, a Friday, journalists
picture and interview a long list of competitors with their
lawyers, at Government offices, delivering very heavy boxes
containing their proposals and all the necessary documents.
Alea jacta est.
The following Monday the boxes are opened, and a
press release reveals the names of all participants. The list is
quite long and interesting. The tender committee then starts
its long and decisive work. Journalists, observers and
analysts try to understand what is going on in the committee
and to guess who will have better chances, more capital,
better projects and more experience.
A few months later, the historic day arrives. At a press
conference, the top Government official announces, on
behalf of the tender committee, the results: competitor ABC,
Ltd has scored more points in total and is therefore the
winner. On that day, the shares of ABC, Ltd skyrocket to
historic highs. In economic and financial television channels
and newspapers, the size of the investment and the potential
revenue of this new market is discussed at length.
We have a gaming concessionaire.
The concessionaire gives immediately a press
conference, in a packed room. She expresses how thankful
she is for having been chosen. She feels extremely honored
and will do everything to fully comply with the commitments
made in the concession contract that will be signed and make
a major contribution to the economic development of the
place. With her, there will be diversification and service
quality like the place has never seen.
On the other hand, for a long list of well-known
international competitors the moment is of defeat, of
shattered hopes. All the studies, preparation, positioning and
marketing done was in vain. They gambled and lost. Their
shares sink, causing a mini-crash. Some do not accept the
decision. They sue, but the disputes do not produce any
result: courts give reason to the Government, as the process
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was conducted fully within the law. In a short time, the dust
settles.
With everything clear, it is time to start working. There
are architectural and works projects, issues of accessibility,
transportation, land use, infrastructures — a million things
to solve, given that the new integrated resort will be like a
small town. And above all there is the problem of financing
this enormous investment.

IV

Many months have passed. However, the

concessionaire has not yet started the construction work.
Nothing happened, apparently.
Various commentators begin to ask whether there is any
problem. Articles appear in the newspapers raising the issue.
In social networks and commentary boxes many people
claim that the company is not reliable, and that they already
knew that this was going to happen. Therefore, the
Government should act immediately and withdraw their
concession. Lots of questions are being asked. Does the
concessionaire have a secret agenda? Does she actually want
to sell the concession to third parties, and pocket a fabulous
profit, without building anything? Is the real aim to get a
good position for a jurisdiction other than ours? Everyone
asks what exactly is going on.
The concessionaire apologizes and endeavors to explain
that the delays are due to technical reasons, the sheer
complexity of the project, and to small changes in the plans
in order to improve them and make the integrated resort
even more beautiful. There are also some issues on funding,
which will be resolved very soon by a syndicated loan about
to be signed.
It is amid this atmosphere of nervousness and mistrust
that the foundation stone is formally laid. The construction
of the integrated resort will finally start.

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 V

Years go by. Until, one fine day, with pomp and

circumstance, fireworks and dancing waters, and in the
presence of all the local leaders, the integrated resort is
opened to the public. Gaming is going to start.
Large crowds of tourists arrive, some attracted by false
rumors that lots of goodies would be handed, including free
gaming chips. In the casino, the Baccarat dealers smile; they
had been training for months and today it is for real. Cheaters
are also around, trying to exploit unexperienced dealers in
the mass market section. At the hotel reception there are
endless queues for check-in. The shopping mall, a real
labyrinth, is invaded by hordes of tourists eager for new
luxury goods stores and tax-free purchases. There is a lot of
excitement. Some gamblers stay in the casino for more than
24 hours.
The opening day goes well, and all local and regional
television stations broadcast the news at length. It is also a
financial success. The concessionaire starts to cash in very
significant amounts. The tax revenue of the first quarter is
much higher than initially anticipated. Very soon, the old
Government budget problems start to disappear and with
this finally some long-delayed public works can move ahead.

VI

The hotels around the integrated resort are all fully

booked in holidays and weekends, and very well attended in
weekdays due to a constant stream of conferences and trade
shows. The casino does roaring business. Many small
businesses and service providers work as suppliers to the
integrated resort, filling every conceivable need. The local
economy has been transformed.
The concessionaire quickly becomes the largest
employer of the entire area. She acquires economic power
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and considerable political influence. She operates casinos,
various hotels, many restaurants, a fleet of ferries, some
aircraft for the VIP players, dozens of buses for the mass
market, in addition to real estate projects, large shopping
malls, shows, and the largest convention center in the
country.
The senior managers of the concessionaire are now
present at all major public events. They finance other
activities, support sports and research in universities. The
main shareholder becomes known for his philanthropy. As
years go by, the concessionaire acquires an increasingly
important status.

VII

Time passes. In fact, the concession has a very long

duration, of twenty years or more. It is a generation; two
decades is a lot of time. What will happen next is for others
to solve, when such time will arrive.
However, time inexorably goes by. What at first was a
very distant prospect gradually approaches. There is now
little time left before the end of the concession. Scholars,
analysts and bankers begin to question the future. How will
it be now? The pressure increases rapidly. Everyone wants
answers.
After a period of silence, the Government finally
announces that, as anticipated under the law, a new public
tender for a monopoly concession will take place. Once again,
a merciless moment of decision will have to happen.
Analysts and commentators return in force. The
performance of the concessionaire is evaluated. Will she be
able to continue? Is she going to be defeated by stronger
competition?
Some newspapers publish articles clearly linked to the
concessionaire, full of warnings, stressing the need to be
extremely careful and not embark on any foolish adventures.
People should not believe in empty promises made by
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outside opportunists. This concessionaire has been here for
many years, and she is the only company that can trusted.
The Government must not be naive.
It becomes very clear what everyone already knew: the
concessionaire has changed a lot these years. Before she was
like a very elegant and beautiful, but fragile, young woman.
Now she is older, stronger and heavier. She speaks with
greater conviction, in a louder voice. She gained power.
However, in her heart, she feels weak and is still fragile.
She knows very well that this was, from the beginning, a
marriage with a firm deadline attached and without any
commitments whatsoever after that. She is now vulnerable to
all kinds of influences and demands. She wants, at all costs,
to ensure continuity. She wants to be in the good graces of
the decision makers. She tends to accept all impositions
made to her. She has a keen awareness that she can be
unceremoniously dispatched — exchanged for another with
more seductive promises. She despairs and thinks: “I do not
want to die! I want to be born again and continue in the new
cycle that will open! I can do so much more…”.

VIII

And so, the time comes for a new public tender. The
concession will not be extended. We are going back to square
one. The problem is that the new public tender is not an
examination of the past. It is a discussion around future
projects. The concessionaire insists that no irresponsible
decisions should be made. However, the tender committee
will only look at the projects that are presented, as the public
interest requires.
And this is the point at which a new decision is made,
and we return to the beginning.

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 JORGE GODINHO

Jorge Godinho is currently a visiting professor of gaming law

and criminal law at the Faculty of Law and at the Faculty of Business
Administration, University of Macau.
He holds a PhD (2006) in law from the European University
Institute in Florence, Italy, and a master’s degree in law from the
University of Macau (1999). He is a law graduate from the University
of Lisbon (1989).
Jorge is very well known for original research that explores
and maps uncharted legal waters, and he has a series of firsts.

He published the first monograph in Portugal on the crime of

money laundering in 2001 (Do crime de branqueamento de
capitais, Almedina, Coimbra).
He produced the first full translation of a major code into
English in Macau (Commercial Code, Macau, 2003).
He wrote the first major treatment of Macau law in English
(Macau business law and legal system, LexisNexis, Hong Kong,
2007).
He wrote the first major treatment of gaming law in
Portuguese language (Direito do jogo, vol. I, Rui Cunha Foundation,
Macau, 2016).
In 2019 he published the first history of casino games of
chance in Macau (Os casinos de Macau. História do maior mercado
de jogos de fortuna ou azar do mundo, Almedina, Coimbra).

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 Other firsts include: the first discussion in Portuguese
language of the crime of unlawful enrichment (“Do crime de riqueza
injustificada”, in Boletim da Faculdade de Direito da Universidade
de Macau, no. 24, ano XI, 2007, 17 ff); and the first discussion in
Portuguese of confiscation of proceeds of crime with reversal of the
burden of proof (“Brandos costumes? O confisco penal com base na
inversão do ónus da prova (Lei n.° 5/2002, de 11 de Janeiro, artigos
1.° e 7.° a 12.°)”, in Liber Discipulorum para Jorge de Figueiredo
Dias, Coimbra Editora, Coimbra, 2003, 1315 ff).
Prior to embarking on an academic career, he practiced law in
Portugal and Macau, and worked for five years at the Monetary
Authority of Macau, the regulator of banking, insurance and
financial services.
He can be reached at jorge.godinho@outlook.com.

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