Thailand Looks to Legalize Casinos in Latest Effort to Win Back Tourists

If you wanted to see a copybook example of leaving no stone unturned, Thailand would be it. In an all-out effort to lure tourists back after the Covid pause, the country recently decriminalized cannabis and is now looking to open casinos.

A recommendation received by the Thai parliament last month sought that the government allow “entertainment complexes,” including legal casinos, to be built in key cities across the country.

With huge inflows of tourism infrastructure investment expected in Southeast Asia over the next few years, especially in growth markets with the largest potential, such as Indonesia and Vietnam, Thailand might be going through a fear-of-missing-out experience, suggested Gary Bowerman, director of Check-in Asia, an Asia-focused travel intelligence and research firm.

Thailand wants to show it can diversify its travel and tourism sector to attract new investors, Bowerman said. “Intense competition is taking shape to entice investors and tourists to help rebuild economies across the region. This will be a central part of the region’s economic narrative over the coming years.”

Integrated Resorts Market in Asia

The integrated resort market that brings together hotels, casinos, convention facilities, dining, entertainment shows, luxury retail and themed attractions, is already quite crowded in Asia.

Along with regional market leaders like Macau and Singapore, Cambodia, Vietnam, Philippines, South Korea and Malaysia have integrated resorts and Japan is developing this sector.

With Macau — the casino capital of Asia, still wary about letting in tourists following mainland China’s strict zero-Covid policy, there is now an opportunity for other Asian destinations to woo these tourists.

Integrated casino resorts can be a great tool for tourism, as long as it is considered an aid and not the reason for it, said Alan Woinski, CEO of Gaming USA Corporation.  

While Singapore with only two integrated resorts — Marina Bay Sands that caters more to business and the Resorts World Sentosa, that is geared more towards tourism/leisure — may be the best model of how things can be done correctly, South Korea and Vietnam are examples of the wrong way to do it, said Woinski. 

“Vietnam is making developers spend $2 billion per resort and does not allow locals to gamble. Their locations were also picked to create tourism. South Korea also allows only foreigners to gamble. Both countries have seen nothing but losses from these resorts.”

While Woinski did mention Macau’s success in this segment, he added, “Macau’s greatest feeder market in the world has been China. Unfortunately, that has completely blown up in their faces now.”

Thailand may pin its hopes on its popularity with Chinese travellers, but Chinese travellers to Thailand arrived for various reasons, and there is no guarantee these resorts would be able to attract the vital junket market, which supported the casino sector in Macau, noted Bowerman.

Then again, China has also made strong statements prohibiting its citizens from participating in gambling overseas.

The Thailand Story

Bringing an integrated resort to a destination is a long-term play and involves massive capital investment. A panel of Thai lawmakers have now called for amending Thailand’s Gambling Act of 1935, which prohibits most types of betting, but has a provision that allows the government to issue decrees or licences for certain gaming activities and venues.

“At least $11 billion in additional tax revenue would be collected annually once several facilities are operating,” said Pichet Chuamuangphan, a vice-chairman of the panel.

The law amendment would be followed by a tender and licensing process, after which investors and franchisees would have to be secured. Master planning and approval would then need to be undertaken, after which construction, fit-outs and staff hiring would follow, explained Bowerman.

“Japan, which amended its casino gaming law six years ago, is a good example of just how long and complex these processes can be,” he said.

The Casino Committee of Thailand had pointed out that it is feasible to have five casino resorts located across the country. The locations suggested were Chiang Rai or Chiang Mai in the north, Pattaya City in the east, Phuket, Phang-nga or Krabi in the south, Ubon Ratchathani, Udon Thani or Khon Kaen in the northeast, and Greater Bangkok. 

Five resorts may be a bit much for Thailand, but they have the right idea as far as the locations are concerned, quipped Woinski. “One in the city — Bangkok, and the rest in more tourist-centric locations, spaced out around the country.”

MGM Resorts had also referenced Thailand on their recent earnings conference call as being interested in the market.

Phuket would be a strong candidate for legalised casinos given its significant tourism support system, said Sumitha Soorian, executive director of Phuket Hotels Association. 

“Coupling gaming with a world class branded tourism attraction can be a strong draw card. In addition, local taxes on gaming can inject much-needed infrastructure funding into the island’s economy. I’d advocate integrated resorts and not just standalone casinos,” Soorian said. 

While Woinski opined Thailand’s integrated resorts could be a big success, he warned, “It really will depend on how Thais feel about it. The Japanese have made it quite clear they want nothing to do with integrated resorts. Local opposition, along with Japan’s ridiculously high investment parameters, have resulted in only two proposals, while there were early indications of more than 30 bidders.” 

What Are the Risks?

With the integrated resorts industry in Asia battered by Covid-19, there are also questions about whether investors will be enthusiastic to enter a new market, even if it is Thailand — the most-visited country in Southeast Asia.

Starting from scratch does bring huge risks as the casino gaming and integrated resorts market will take time to recover, explained Bowerman. “Entering the integrated resort market doesn’t provide any insurance against a future pandemic.”

Woinski would want to see Thailand adopt a Singapore-type model with only two or three resorts. “They look like they’ll be doing something between Singapore and the Philippines. Both are successful, this will be one of the few good opportunities remaining in the global casino business.”

However, it all depends on what the final parameters and tax rates will be, as Woinski noted that is what has doomed many others such as Japan, Spain, and Greece. “If they are reasonable, like Singapore, this can be very successful. However, if they turn out to be hostile and unrealistic, like Japan, it won’t work,” he said.

High-quality integrated resorts in Asia typically generate strong meetings and events revenues, and Thailand could benefit by joining the party. But Bowerman offers a word of caution: In a market still recovering, would this dilute the existing regional market?