The Southeast Asia region might soon be welcoming a new player in the regulated gambling scene as Thailand continues to push for gambling legalization with a new bill. However, industry insiders are still not convinced about Thailand’s potential as a gambling destination.
Thailand is edging closer to legal casino wagering with each passing day. Industry insiders anticipate that the legislation permitting casino resort establishments nationwide could be ready by 2025. Speaking at the ongoing G2E Asia conference in Macau, a senior gaming executive, Daniel Cheng, remarked that the Thai government was forging forward with plans for legalizing casinos. He explained:
“We are hearing that the legislation could happen as soon as early next year because as far as the government is concerned- and it’s something I don’t really agree with- they would like to see the fruits of this legislation and the opening of the first Thai resorts while they are still in government.”
Earlier this year, the Southeastern Asia nation took its first big step towards legalizing casinos. Thailand’s House of Representatives voted in favor of a study that would allow casinos to be hosted under large entertainment complexes. The motion received a majority backing in the house, where 253 out of 257 legislators voted in favor of the plan. This decision was then handed over to the cabinet tasked with deciding whether the decision to legalize casinos was the right move forward for the country.
The House Panel study revealed that Thailand’s tourism sector could receive a $12 billion annual revenue boost by legalizing casinos and housing them in big entertainment establishments. The study also showed that the potential for average tourism spending could rise by 52% to 65,050 Bhat ($1,700) per trip when these entertainment hubs are established. So, from the said numbers, the country could receive additional net earnings to the tune of a whopping 449 billion Baht.
As the push for legalizing casino gaming continues, a few of the most prominent stakeholders in gambling have already started eyeing a stake in the potential Thai gaming market. Galaxy Entertainment Group and MGM Resorts International are reported to have already carried out feasibility studies in Thailand. The studies by the two giants are said to be a hedge against uncertain prospects in Macau.
Under the legislation, an Entertainment Complex is defined as a venue containing various types of businesses. It will comprise bars, restaurants, five-star hotels, sports entertainment, and casino businesses. Although there has been no specification on the percentage of the casino area, the Deputy Finance Minister recently publicly stated that this area may be limited to 5% of the total space.
Regarding licensing, business operators will be required to be based in Thailand. They’ll also be expected to have a minimum registered capital worth 10,000 million Bhat. Like most regions with legal gambling globally, the license application procedure will be conducted through a competitive bidding process. Additionally, to protect the vulnerable Thai population, an age limit for legal gambling will be imposed at 20 years.
Also, persons prohibited by court orders from entering Thai casinos won’t be allowed to access these premises, and citizens must register and pay a casino entry levy. Meanwhile, as things stand, there isn’t a consensus on the tax rate levied on casino operators, although industry analysts estimate that it could fall within the 17% mark.
While the Thai government is confident that the regulations under formulation are enough to attract significant foreign investment, many experts still believe that the regulatory environment falls short of the required qualities. For instance, Seaport’s senior research analyst, Vitaly Umansky, who has been examining the growth prospects of US-based Wynn resorts, pointed out that Thailand was a potential market that Wynn had looked to tap into. However, the likelihood of that happening was significantly low. In his exploratory piece, the senior research analyst wrote:
“This market is too early in the process to gauge if Wynn could eventually be involved, but at present, our thinking on Thailand is that the market will not be ready for the US-regulated operators to be involved.”
You see, the remarks made by Umansky aren’t only his but are said to be the prevailing feelings of many in the industry, particularly foreign investors. The Asian gaming go-to markets are undeniably Macau and Singapore. Thus, any new market that comes up will undoubtedly be compared to these markets as a measure of success.
The difficulty in replicating the models set up in the two countries we’ve just mentioned is that the two are entirely different socio-economic and political entities. The point of pessimism from industry observers seems to be a belief that Thailand lacks the monetary capacity to establish systems akin to what has been developed in Macau and Singapore.
Another aspect of Thailand that makes investors jitter is the country’s unstable political situation. Many investors are seeking assurances that their investments, which, as you’re well aware, for a casino establishment that could run into billions of dollars, will be secure. Currently, the prevailing political tensions in the country do not paint an attractive picture, especially from a potential investment point of view.
The fragile legislative ecosystem is also worrying if investors are looking to plow money into the Thai market in the long term, which would be the case with a casino resort. The flip-flop nature could be best seen when cannabis was legalized in the country one year and banned in the next year. Investors would ideally want a stable environment with consistent policies, which has so far eluded Thailand.
It is currently unclear what date the promulgation of this law may land. That said, the country’s Ministry of Finance will, in the meantime, deliberate with other ministries on the next course of action for this legislation. Various structures still need to be determined to set up casino resorts. Additionally, details such as the suitable locations of these entertainment complexes and the impact this will have on the country still need to be ironed out.
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