Macau may bar casino operators from sharing slot-machine revenue with other companies, which could be a blow to the blossoming partnership between Hong Kong's Melco International Development and Australia's Publishing & Broadcasting Ltd.

David Green, who has been advising Macau on regulatory issues since 2001 as head of PricewaterhouseCoopers' Asian gaming practice, said at this week's Asian Gaming Expo he expects new slot-machine rules, to be issued later this year, will bar revenue sharing because Macau carefully chose the companies it granted the right to operate casinos and maintains oversight of their management and ownership. Allowing revenue sharing would bypass this control system.

"The sharing of revenue in principle is not allowed,'' said Green.

Melco and PBL together hold a stake of 80 percent in the Mocha Slot Group of electronic gambling halls. Mocha recently opened its fourth hall.

Managing director Lawrence Ho said at the expo that Mocha will add seven more locations by the end of next year. His father, Stanley Ho, holds the other 20 percent of Mocha's shares.

The parlors operate under an arrangement with Sociedade de Jogos de Macau, the casino operator controlled by the Ho family, through which Mocha provides, installs and maintains the machines for SJM and is paid 31 percent of the gross revenue earned from the machines.

Melco forecast in April that this arrangement would produce HK$146.8 million in revenue for Mocha this year, HK$238.9 million next year and HK$528.5 million in 2007.

Investment bank CLSA forecast in a new report this week that Melco will generate HK$533 million in total revenue this year.

Melco spokeswoman Maggie Ma said it believes the bar on revenue sharing would only apply to manufacturers. Melco said in a circular issued before a shareholder vote last month to adjust some terms of the deal with SJM that it represented ``an unprecedented business arrangement approved and endorsed by the Macau government.''

Manuel Joaquim das Neves, director of the Gaming Inspection & Coordination Bureau, said Thursday that his office is planning to discuss the draft regulations with casino operators. He said it ``is not decided yet'' whether the new rules will bar revenue sharing.

Green said he also expects the new rules to direct casinos to acquire slot machines directly from their manufacturers, rather than via distributors.

This could hurt Malaysia-listed Dreamgate Corp, which last year generated 25.9 million ringgit (HK$53 million) from distributing slot machines and other casino equipment in Macau, up from 2.8 million ringgit in 2003.

The purpose of cutting out distributors is to eliminate a channel for kickbacks, say industry insiders.

Green said he does not expect Macau to set any specific payout rates for slot machines beyond the requirement imposed last year that operators can only import machines that meet the standards of Australia, the United States or other designated jurisdictions.

Jason Gao, director of the Institute for the Study of Commercial Gaming at the University of Macau, said government figures show Macau's slot machines only paid out 41 percent of money inserted in 1999, but that figure edged up over the following years to reach 50 percent in 2003.

Figures for last year are not available, but presumably are much higher.

``Our payout percentage is right at the international standard, which is 92-96 percent,'' said Lawrence Ho.

``You need to have a competitive payout percentage.''

zach.coleman@singtaonewscorp.com