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LAST WORD
Is Asia falling behind in the regulation race?
Sharon Singleton | Managing Editor, AGB
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Asia’s gambling industry continues to power ahead, in most cases leaving regulators scrambling to keep up, creating an additional layer of risk for investors.
While Singapore and Macau stand out as models in the region, many of the emerging jurisdictions still need to make considerable progress when it comes to their gaming regulation.
Cambodia for example, which is the fastest-growing jurisdiction in the region, with more than 136 casino licenses issued, has once again delayed its legislation. Already more than a decade in the making, it’s now expected to be published sometime early next year.
In the meantime, casinos have proliferated, with the town of Sihanoukville now overrun with Chinese-built palaces, with little to no oversight.
The town has unfortunately earned the reputation of being the wild west of gambling in Asia, with rising crime including money laundering, kidnapping and loansharking.
Phnom Penh has said enough is enough, banning the online gambling that has fuelled much of the boom. However, to ensure the success of its gaming industry it needs to get its regulatory house in order and fast.
Vietnam has already published rules to cover its casinos, which have been widely welcomed by the industry. But even so, gaps remain, with operators seeking clarity from the government.
And there, things can get complicated. There is no one body responsible for casino regulation, with various ministries ranging from finance to defence all weighing in.
The Ministry of Finance is seen as being pragmatic and willing to listen and take on board the views of investors in the industry. For example, there has been a proposal to allow the inclusion of infrastructure projects into the $2 billion initial investment needed for a casino license. This came due to concern the figure sets too high a bar for a project in Vietnam and would deter foreign investors. However, that idea has run into opposition from other sectors of the government, including defense.
This input from multiple stakeholders creates confusion and slows the pace of change.
In the Philippines, regulation is also a work in progress. There have long been calls for the Philippine Amusement and Gaming Corp. to sell off its own casinos to focus on its role as regulator, due to the evident conflict of interest. PAGCOR has so far resisted, though it now appears the Department of Finance is prepared to take another look at the issue.
The industry has argued that the casinos are tired and need a revamp, which needs to come from private capital. Once brought up to standard they will generate significantly more revenue, which ultimately would benefit the government.
The Philippines is also grappling with its online industry. So far, it has resisted Beijing’s calls for an outright ban, though the clock may be ticking if it doesn’t succeed in bringing its Philippine Offshore Operators (POGOs) under tighter control.
The country’s main trade union has suggested creating a regulatory oversight body that would encompass the variousagencies currently attempting to knock the POGOs into shape, to avoid issues falling into the cracks between various ministries.
Other problems have emerged when it comes to arbitrating business disputes. Recent cases have highlighted that even outside of gaming regulation, many countries in the region due not have the legal infrastructure necessary to ensure cases can be fairly settled in court.
Donaco International for example has found itself in arbitration in Singapore over a dispute with the former Thai owners of its Star Vegas casino in Cambodia, over their breach of a non-compete clause. The Thais have since ramped up their feud by cancelling the lease on the land the property sits on. Silver Heritage had the rug pulled out from under its Phoenix Club property in Vietnam after table games were excluded from a revised investment certificate.
Although it’s easy to knock issues with regulation in Asia, many who follow the industry closely agree that on the whole things are moving in the right direction. In terms of the spirit of the law, governments are keen to see that their gaming industries have the necessary oversight.
While Japan plans to emulate Singapore’s model in shaping its IR industry and will likely get things right from the get go, many other emerging jurisdictions will have a slower evolution though will get there in the end.