In recent years, there have been whispers of a major transformation on the horizon for Thailand’s tourism and entertainment industry. The talk of the town revolves around the potential legalisation of casino gambling within the next three years. Informed sources suggest that this imminent decision is already setting off a frenzy among international and regional gaming operators. The success of this endeavour, however, hinges on a complex web of factors, including how Thailand structures its regulatory framework, the willingness of foreign gaming operators to partner with Thai companies, and vice versa. It’s a high-stakes game of chance, with the outcome still uncertain; as Destination Capital CEO James Kaplan aptly points out, “Thailand will do ‘it,’ but the question is what the ‘it’ will look like.”
A Land of Opportunity
Thailand, with its unique blend of being a regional business hub, a global tourist destination, and a growing domestic interest in gaming, has the potential to become one of the most successful gaming jurisdictions in the world, as noted by Frederic Gushin, Managing Director of Spectrum Gaming Group. The allure of Thailand’s potential as a gaming hotspot is impossible to ignore. However, the journey toward this transformation is filled with obstacles, including Thailand’s 101st rank in Transparency International’s Corruption Perceptions Index and opposition from various quarters, ranging from Buddhist clergy to underground casino stakeholders.
Prominent Players in the Game
It’s evident that Thailand’s potential is not lost on major gaming operators. Hard Rock International, led by President Edward Tracy, has expressed a keen interest in investing billions of dollars in a Thailand-integrated resort. This American Native American-owned operator can certainly expect plenty of company. Las Vegas Sands, founded by Sheldon Adelson, has been exploring opportunities in Thailand since 2005, and it’s not the only one. During this January’s earnings call, Adelson’s successor, Sands chairman and CEO Robert Goldstein, stated, “We’re certainly looking hard at Thailand, and we’d love to have a presence in the future.” These statements clearly underline the international interest in Thailand’s gaming market.
Galaxy Entertainment Group (GEG) is another significant player closely monitoring Thailand’s moves. GEG Executive Vice-President Buddy Lam commented, “We believe [Thailand] will draw a lot of attention if it decides to open for integrated resort (IR) development.” The odds seem to favour this latest Thai legalisation effort, as James Kaplan, based in Bangkok, explains, “The key difference is we live in different times. Public debt is now 58% of GDP. The government needs to raise revenue to pay this down.” Kaplan adds, “Thailand has casinos at all its borders, and the government can capture this money leakage and tax it by having legalised and regulated casinos in Thailand.”
Perhaps the most crucial turning point was the passing of King Bhumibol Adulyadej in 2016. The late king was a staunch opponent of casinos. Recent polling shows that most Thais are now open to casino legalization. Shaun McCamley, Managing Partner of EuroPacificAsia, says, “Everyone on all fronts supports it, including the all-important support of the [current] king and the Thais themselves.”
Building a New Entertainment Ecosystem
A parliamentary study of casinos released in January proposed the establishment of up to five “entertainment complexes.” These complexes would be similar to integrated resorts (IRs) in Singapore and Macau, with a primary aim to generate tax revenue. These complexes would feature not only casinos but also hotels, shopping centres, convention facilities, and other amenities. The document also signals the potential for sports betting and online gaming.
James Kaplan highlights the need for an energised tourism offering, especially for broader markets with higher spending power, as the Chinese traveller market has not yet fully recovered from the pre-pandemic levels. In 2019, Thailand welcomed a record-breaking 39.8 million visitors, with nearly 11 million of them coming from China. Visitor expenditures accounted for 12% of GDP. However, even at that time, growth was slowing down in both categories. The proposed entertainment complexes have the potential to rejuvenate Thailand’s tourism sector and keep it competitive on the global stage.
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IRs and Their Economic Impact
“They’re very interested in boosting tourism, expanding the convention market,” Edward Tracy of Hard Rock International points out. He emphasises that without an integrated resort (IR) and a casino to fund the expensive convention facilities and hotels, it’s becoming more and more challenging to compete in the convention markets
Hard Rock International has been active in Thailand since 1991, with cafes in Bangkok, Phuket, and Chiang Mai, as well as a hotel and cafe in Pattaya, all established in collaboration with local partners. However, Thai law requires the majority of land ownership to be in Thai hands. To overcome this hurdle, the parliamentary report raises the possibility of creating special zones for IRs, potentially including exemptions from Thai ownership requirements. While this might facilitate investment, it could also stir opposition from the public and various business interests, including the property sector, border casinos, and illegal domestic operators.
Choosing the Right Regulatory Model
The potential success of Thailand’s casino legalization depends significantly on the chosen regulatory model. Nevada’s Gaming Control Board and Singapore’s Gambling Regulatory Authority both emphasize the importance of licensees adhering to probity requirements wherever they operate. Macau, known for its booming casino industry, requires casino concession holders to abide by Macau’s regulations regardless of their location. Edward Tracy, whose parent company owns and operates the Mirage on the Vegas Strip, highlights the importance of a regulatory structure that makes sense for Western companies. He notes, “From our conversations with government officials on my last trip [to Thailand], the good news was that they really liked and believed in the Singapore model, and we do as well.”
Thailand would likely need to adopt elements of the Singaporean approach while adapting them to Thailand’s unique policy goals. Spectrum’s Frederic Gushin explains, “Thailand would need to adopt some elements of the Singapore approach and adapt them to the policy goals of Thailand.”
Ensuring Transparency and Accountability
For Thailand’s gaming industry to thrive, it is essential to establish a regulatory framework that ensures transparency and accountability. Entrance restrictions, stringent anti-money laundering measures, and comprehensive anti-corruption components are crucial elements in this framework. However, challenges remain in creating a regulatory framework that satisfies the requirements of both US operators and the Thai government.
As Steve Vickers, a risk consultant, points out, Thailand could produce regulations that accommodate US and Singapore operators, but this might not happen quickly. Brendan Bussmann, Managing Partner of B Global Advisors, emphasizes the importance of aligning interests to establish a strict regulatory compliance regime. This alignment could be challenging, as it involves numerous vested interests.
The Role of Less-Regulated Operators
In a scenario where Thailand’s regulatory framework does not align with Western standards, operators from less rigorously regulated jurisdictions could fill the void. NagaCorp in Cambodia and Travellers and Bloomberry in the Philippines are potential candidates. However, these operators have not officially responded to inquiries regarding Thailand.
Thailand’s own developers could also play a significant role. These companies have already created world-class complexes with shopping centres, hotels, offices, and entertainment facilities. James Kaplan notes, “For sure, most large Thai companies and landowners will throw their hat in the ring to participate in the [IR] bidding. Most will seek a tie-up with a gaming.