iGaming Business has learned that Thailand is expected to legalise gambling in casinos within the next three years. This will cause a rush of international and regional operators. The decision on where to stake a claim depends upon how Thailand draws up its regulatory map and the willingness of foreign gaming companies to work with Thai firms.
James Kaplan, CEO of Destination Capital says that Thailand will “do it”, but that the real question is how.
Spectrum Gaming Group’s managing director Frederic Gushin says, “Thailand is in for a rare opportunity to be one of the best gaming jurisdictions around the globe.” Thailand is a global business center and tourist destination, plus there’s a growing appetite in Thailand for gambling.
Transparency International’s Corruption Perceptions Index ranks Thailand 101st. The opposition ranges between Buddhist clergy and underground casino stakeholder amid political turmoil with the largest parliament party being excluded.
Rock and Rollers
Hard Rock International’s president Edward Tracy told iGaming Business that Hard Rock International was “absolutely” interested in a multibillion-dollar integrated resort planned for Thailand. Native American owned operator will have plenty of competition.
Sheldon Adelson, the founder of Las Vegas Sands, expressed his enthusiasm for Thailand in a CNN interview from 2005. Sources claim that Sands presented IR to government officials in 2010. The company also hired local representatives as Thailand flirted intermittently with legalising casinos.
Robert Goldstein (Sands Chairman and CEO) said during the January earnings call that Adelson’s replacement, Sands Chairman and CEO Adelson, was “certainly looking at Thailand with a lot of interest and would love to be able to establish a presence there in future.”
Galaxy Entertainment Group is focused on its development in Macau. GEG’s executive vice president Buddy Lam said that the company will also look into overseas opportunities “on a case-by-case basis”. We believe that [Thailand] would attract a great deal of attention if they decided to allow IR development.
The odds are in favor of this new Thai effort to legalise marijuana. Kaplan, a Bangkok-based , says: “The main difference is that we are living in different times.” Public debt now accounts for 58% of the GDP. The government must raise revenues to reduce this debt.
The death of King Bhumibol, an opponent to casinos who was adamant, in 2016 is perhaps the most important. Most Thais are open to legalising casinos, according to a recent poll. Shaun McCamley, managing partner of EuroPacificAsia says that “everyone supports it on every front including the important support from the [current] King and the Thais.”
Complex Entertainment
In a January study, the parliamentary committee on casinos proposed up to five entertainment complexes. It would be similar in concept to IRs found in Singapore or Macau. The complexes, which are primarily designed to raise tax revenue, would include casinos, shops, convention centers, and hotels. This document indicates that online gambling and sports betting are also possible.
Kaplan says that the tourism offer needs to be revitalized with an appeal for wider markets, especially as Chinese travellers have not recovered anywhere near their pre-pandemic level.
Thailand welcomed 39,8 million visitors in 2019, with nearly 11 millions of those coming from China. The visitor expenditures represented 12% of the GDP. Even then, growth in both categories was slowing.
Conventional Wisdom
Tracy says, “They are very interested in expanding the market for conventions and boosting tourism.” It’s becoming more and more challenging to compete in convention markets without an IR or a casino.
Tracy cites Hard Rock’s studies that show convention-based IRs are viable in Bangkok metropolitan area and Phuket resort island, both located south of Thailand. Former Sands China COO, estimates a Bangkok IR Budget between US$3.5bn and $6bn with US$1.5bn to US$2.5bn in Phuket.
If you get enough people working together, you could have some pretty good-sized conventions. Phuket is a popular tourist destination and has an airport. It just needs a few additional components to tick the boxes of meeting planners all over the world.
Tracy mentions that Hard Rock is active in Thailand as far back as 1991. Operator has cafes and hotels in Bangkok, Phuket, Chang Mai and Pattaya. All of these are with local partners. Thai law mandates that land be owned by a majority of Thais.
In the report, it is suggested that special zones could be created for IRs. This may include exemptions from Thai ownership rules. However, a waiver could spark opposition by the business and public. This includes the real estate sector, border casino operators and illicit domestic operators.
Made in Singapore
It is largely dependent on the “it” that Thailand legalises to determine if it will attract the most experienced gaming professionals capable of making the largest investment.
Nevada’s Gaming Control Board, and Singapore’s Gambling Regulatory Authority have both confirmed to iGB that they expect their licensees follow the same probity standards wherever they conduct business. Macau expects casino concession holders in Macau to follow Macau rules wherever they are operating.
Tracy, who owns the Mirage in Las Vegas and runs it for her parent company, believes that a regulatory framework which is sensible to Western businesses, is crucial. The good news is that the government officials I spoke with on my recent trip to Thailand really loved and believed the Singapore model, and so do we.
Gushin, Spectrum’s Gushin, says that Thailand would have to adapt some of Singapore’s policies to Thailand.
Keep the wrong people away
According to Tracy, a Thai version of the law would have entrance restrictions that “ensure that those who should not be in the casino do not enter the casino… there are no junkets that function and AML (anti-money-laundering) is enforced aggressively… with every anti-corruption element that can be incorporated into the legislation”.
Steve Vickers, a risk consultant at the Risk Consultants Group of Thailand (Risk Vickers), believes that Thailand can produce regulations for US and Singapore operators “but not anytime soon”.
Brendan Bussmann, managing partner of B Global Advisors says that if this was just a matter of legalisation then it could be achieved fairly quickly. If this is to attract significant investment or add to the tourism offering, then you will have to do this on a much larger scale. The environment in Singapore is very different.
Kaplan, the head of Destination Group’s investment division, said that he was not confident the US gaming operators would be able to maintain their US gaming licenses if the US regulatory framework did not match what they required.
In order to have the government approve a regulatory compliance system that is so strict, I believe it will take a lot of vested interest to align and be on the same page.
Enter the Dragons
Operators from jurisdictions that are less strictly regulated but have a good IR background could step in to fill this void. NagaCorp, Travellers and Bloomberry are some of the operators that could fill this void. They have not responded to iGB’s inquiries about Thailand.
Thailand’s developers also built world-class complexes that include shopping, entertainment, and hotels. Kaplan states that “for sure, the majority of large Thai landowners and companies will participate in [IR] bid”. Most will look to form a partnership with a gambling company.
Klebanow Consulting’s principal Andrew Klebanow says that a Thai developer of real estate or a mall operator can develop their own integrated resort/casino without having to partner with a casino operator from abroad.
It isn’t difficult to add a casino [to a project]. The Galaxy casino in Macau is the leading example of this model.
Momentum to deadlock
The previous Thai government gave a boost to the legalisation of casinos. The May parliamentary elections produced a deadlock lasting 100 days. The political instability has been almost constant since 2006, when a coup was used to remove Thaksin. Shinawatra’s government, which supported the development of casinos, ended its 15-year self-imposed ban on exile in August. It was only a matter of time before his successors led a coalition government that included military factions who ousted him and his sister Yingluck (in 2014).
Move Forward is excluded from the new government, despite winning more seats than any other party in May. The military-appointed senate effectively vetoed Progressive Move Forward’s attempt to form a government. This outcome and efforts to disband Move Forward, as well as ban the leader of Move Forward from politics, may revive street protests. Previously, these ranged in intensity from a festive occupation of Bangkok’s central area to violent clashes between government forces and protesters.
Hard Rock’s Tracy comments: “We need to consider what we have tried to do in other jurisdictions, to ensure that our agreement will stand up against a political swing.”
Klebanow says that public protests against the government are not incompatible with a tourism plan. The military’s intervention in 2014 and the subsequent protests did not stop commerce. After the barricades had been removed, normal life was resumed.
Sources who requested anonymity claim that the post-election turmoil highlights how difficult it is to reach agreement in Thailand, which has become increasingly polarized. This threatens any timeline.
How to learn Japanese?
Japan is a spectre that looms large when there are delays. This country has, along with Thailand, been teasing casino legalisation over the past decade amid widespread excitement from some of gaming’s biggest stars. The legalisation of casinos in Japan began in 2013, with the final approval by legislators in 2018. Licence bids were submitted in 2022.
This odyssey stifled enthusiasm and galvanized public opposition. In the end, two jurisdictions were left vying to win three licences available and one bid was accepted. MGM-Orix IR in Osaka is not expected to be open before 2030.
McCamley: “I do not think we will see another Japan-like scenario.” Former president of Vietnam Grand Ho Tram estimates the initial investment into Thai IRs to be US$800m.
Klebanow is confident that Thailand will be able to complete the legalisation of IR and select developers in 36 months. Some suggest that lawmakers might not have much more time to act than 36 months before the political wind changes.
Thailand may be able to provide new lifelines for Asia’s tour operators, as Macau is no longer an option. Bussmann: “At the end of the day, the question is can you accept that a structure with major players will not impact Macau and other markets?”
Gushin explains that recent reforms in China and their crackdowns have increased the risk of relying on underground banking and junkets. Thailand can succeed without relying heavily on junkets, but it should rely on VIP gaming controlled by casino operators.
There’s no doubt that Thai casinos will prosper, whatever the form they take.
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The Pot
Thailand will become Southeast Asia’s very first country to decriminalise marijuana in June 2022. This shows that the government can make bold decisions. Cannabis outcomes can be used to inform casino legalisation initiatives. However, the outcomes are largely subjective.
James Kaplan, CEO of Destination Capital in Bangkok said: “The legalisation marijuana shows a change in the public’s opinion as well as a social conservatism to become more progressive and open.” It also shows how public policies can tax something that was previously illegal .”
Thailand has officially stated that it allows only “medicinal” and “economical” cannabis use, while recreational marijuana use is illegal. This assertion is in stark contrast to the pot shops that are sprouting up like weeds and selling different varieties of cannabis, each with a specific high. There’s no white coat anywhere.
Smoking is reported to be widespread near Bangkok’s marijuana trucks, despite the fact that public consumption of marijuana outside of authorised sales sites is illegal. The only taxation that is specified is a licence fee of 3,000 Thai Baht ($86), plus an application fee of 20 baht.
Kaplan says, “There’s a lot to be done in terms of fine-tuning.” Once a new administration is established, refinements will be expected. The same goes for gaming .”
You can still see Amsterdam in the East
From Bangkok, where he used to be based, gaming consultant Shaun McCamley said that Thais aren’t flocking into marijuana shops. Most, if not every one of them have a limited amount of daily business. It hasn’t become Amsterdam in the East like some had predicted.
Andrew Klebanow, senior partner at C3 Consulting, says: “They passed regulations which best met the government’s needs, as well as the needs of its citizens and the tourism sector.” I expect that they will adopt the same approach when it comes to legalising casinos .”
This could be a case of stating high-minded goals, but failing to achieve them through legislation, regulations and enforcement, or caving in to economic interest without mitigating the social consequences.
The source, who requested anonymity and has a long history in Thailand, says: “People believe that the government was too quick to legalise cannabis. They didn’t give it much thought.” If casinos are approved, the whole process should be transparent and well-organised.
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Muhammad Cohen, a former US diplomat who is currently iGB Asia’s editor-at-large, has been covering the Asian casino industry since 2006. He most recently covered it for Forbes. In 1997, he wrote Hong Kong On Air – a novel about television news, romance, betrayal and high finance.
