Thailand’s government has reportedly shunned foreign expertise in a bid to create multi-billion dollar casinos and integrated resorts (IR). Muhammad Cohen reports. 
Thailand is on the verge of squandering its extraordinary opportunity to add iconic integrated resorts to its tourism menu and become a top five global gaming market because it is not constructing the necessary legal and regulatory framework to accommodate the world’s top casino operators.
Like Japan, Thailand could endanger integrated resort development because it believes global gaming industry enthusiasm for casino legalisation there gives it a free hand regarding regulation.
Japan regulated too heavily and wound up with just one successful bidder for three licences. Thailand appears to be regulating too lightly and that could have a similarly chilling impact on potential bidders.
While focus has fallen on the regulatory requirements of Nevada and Singapore licensees in order to participate in Thailand, few if any leading casino companies will likely commit to major investment in a market without a strong legal and regulatory backbone.
“Major operators are not going to go into Thailand, nor should they, until they have regulations to the standard that serious operators require,” says David Leppo of CheckMate Mitigation and Playexpat.com. “It doesn’t matter who the operators are, they need proper regulations.”
High hopes, no details
“The government has been vocal about adopting the approaches of the US and Singapore, yet the details of its plan are unclear,” says Akkaraporn Muangsobha, a partner at law firm Rajah & Tann Thailand.
Sources inside Thailand’s government, its private sector and the global gaming industry indicate drafting of the gaming law and industry regulations falls short of what Singapore crafted when it undertook casino legalisation two decades ago.
Singapore’s effort to incorporate global best practices, its clear public policy goals and attention to detail enabled development of two of the world’s most admired and expensive integrated resorts, Marina Bay Sands and Genting’s Resorts World Sentosa.
Thailand’s gaming law – drafted by the council of state and submitted for cabinet review – and regulations contain no limit on the number of licences despite a nearly $3 billion minimum investment requirement, no provisions for an independent gaming regulatory authority, no measures to mitigate social impacts including problem gambling and no details on the licence application process and selection criteria.
One criticism of the drafting process is that government has not engaged international expertise that understands unique gaming industry issues and has experience introducing casino gambling into other jurisdictions.
“Responsible gambling that benefits the economy and the society is possible if done right. And here I think international experts have a crucial role to play,” Maverick Consulting Group partner Ben Kiatkwankul says.
“To ensure a balanced and successful playing field, international experts can take a proactive stance to work with the government to offer valuable insights, best practices and proven models from countries with well-regulated gaming businesses.
“This collaborative approach can provide the Thai government with strong justification and support, enabling them to confidently navigate the complexities of establishing a thriving and responsible gambling industry.”
Take breather, select proper brush
Multiple sources call casino legalisation “inevitable” this time. Pubic opposition – polls indicate a majority of Thais are against casino legalisation – won’t matter because the government has the votes in parliament to pass the gaming bill.
Following cabinet review this month, the bill would go to the house and senate for approval. Bidding for licences could begin late this year or early next year.
At a Rotary Club lunch in Bangkok last month, former Las Vegas Sands global chief casino officer Andrew MacDonald suggested Thailand “slow down”. He recommended a two-stage process with a request for concepts (RFC) “to see what’s possible” before a request for proposals (RFP) to award licences.
“Thailand has the right canvas for integrated resorts,” MacDonald, co-founder and CEO of gaming consultancy Magiq, told Rotarians. “Now it has to paint the right picture.”
To date, a shroud of secrecy obscures the regulatory process. “The fact of the matter is no one knows what they are doing,” Leppo says. “It would be helpful if they were more transparent.”
Marijuana memory loss
Government professional staff beyond the council of state appear to be working with scenarios that politicians have bypassed. That could produce results similar to cannabis decriminalisation in 2022.
This originally sought to expand the medical marijuana sector, but it was hijacked by politicians and implemented with scant regulation and no dedicated product tax, minimising the public benefit while exponentially expanding the social impact.
Sources indicate the government has not undertaken feasibility studies regarding the number of gaming licences or locations, reportedly believing that the private sector is better equipped to determine what’s feasible.
“Ultimately, the success of Thailand’s casino market will depend on effective regulation and strict enforcement,” Akkaraporn says. “It is crucial for the country to adhere to these principles to ensure a sustainable and well regulated industry.”
Family matter
Prime Minister Paetongtarn Shinawatra’s government has made a top priority of establishing entertainment complexes, Thailand’s term for integrated resorts. Paetongtarn’s father, Thaksin Shinawatra, supported casino legalisation while serving as prime minister between 2001 and 2006 until he was ousted in a coup, one of 13 military takeovers in Thailand starting with the revolt against absolute monarchy in 1932.
“If I had $3 billion to invest, weighing on my mind would be that history. The coups would be bothering me more than the regulations,” says Leppo, who expanded his sports betting business to southeast Asia in 2009.
“Coups happen, but business goes on,” Formichella & Sritawat partner Paul Crosio says.
There’s nearly universal agreement that IRs would aid Thailand’s tourism sector, which represents more than 10% of GDP, and bolster the economy.
Cutting economic headwinds
“The Thai economy is not as good as it should be,” Crosio, an economist and former investment banker, tells iGB. “Exports are not robust.”
Economic headwinds include negative population growth, an aging population, low-rated English language skills and competition from Vietnam and Indonesia for low-cost manufacturing.
“Boosting tourism is a two-edged sword,” Crosio says. “The economy is becoming more dependent on tourism now than pre-Covid.”
Last year, Thailand counted 35.5 million foreign visitor arrivals, 89% of the record nearly 40 million arrivals in 2019. Visitor revenue of US$48 billion was just 78% of the US$61.6 billion in 2019.
“Thailand is currently at a critical inflection point with regard to sustainable tourism development in order to maintain its leading position as a global destination as well as enhance its various attractions,” Bangkok Land board advisor James Kaplan says.
“The introduction of integrated resorts in Thailand, if done correctly, would serve to boost arrivals of higher-spending visitors with corresponding increased tourism revenue, attract a greater number of conventions and exhibitions to the country and create jobs for skilled employees.”
Potential IR Impact
Bangkok Land, publicly traded on the Stock Exchange of Thailand, owns Impact, Southeast Asia’s largest convention centre with 140,000 square meters (1.5 million square feet) of exhibition space, plus a 12,000-seat indoor arena, outdoor stadium and two hotels totalling 1,000 rooms.
Impact attracts 10 million visitors annually to more than 1,000 events. A mass transit connection via SkyTrain due for completion this year will likely increase visitor numbers.
Located just north of Bangkok’s city limits, Impact is a 15-kilometre drive from Don Muaeng International Airport, which handles private planes as well as budget carriers. Impact has dedicated access to the expressway connecting it with the rest of metropolitan Bangkok and Suvarnabhumi International Airport, the main gateway to Thailand.
Impact is part of Muang Thong Thani, a community of 300,000 residents developed by Bangkok Land with government and commercial offices, local and destination shopping plus two universities on 1,581 acres (640 hectares). At least 200 acres are available for one or more IRs.
Similarly, Bang Na at the southeastern end of the city has BITEC – Bangkok International Trade and Exhibition Centre – and access via SkyTrain and a major expressway. Nearby, leading Thai retail developer The Mall Group is building Bangkok Mall and Bangkok Arena, a new indoor stadium, due to open over the next two years.
Either or both sites could be prime locations for IRs, piggybacking on existing facilities to create a must-see destination for tourists and residents alike. Those sites have facilities to open a temporary casino if the authorities permit it.
Kaplan, with more than two decades of experience working on IR projects with Kerzner International – including Atlantis in the Bahamas and Dubai and its bid in Singapore – understands IRs are more than just real estate ventures and require effective government oversight.
“The basic premises of any government policy with respect to establishing successful IRs include geographic exclusivity, competitive tax rates, capital investment requirements and, most importantly, clear and transparent government regulations with regard not only to controlling money laundering and other financial irregularities, but to ensuring and enforcing proper guidelines to mitigate possible adverse impact on society, such as problem gaming and illegal gaming activity.”
“Fifty percent of the Thai population over 18 gambles,” Leppo says, citing a recent survey. “The main intent is to keep that spending from escaping beyond Thailand.”
Thais gamble at dozens of casinos just over the kingdom’s borders in Cambodia, Myanmar and Laos, as well as illegal casinos inside the country.
A proposed requirement that Thais show 50 million baht (US$1.5 million) in a bank account for casino entry, which would have effectively shut out nearly all Thais, was deleted from the version of the bill submitted to the cabinet.
Instead, Thais will need to show income tax filings for the past three years to be eligible for casino admission, with a proposed entry tax of 5,000 baht for Thais.
Test pilot
“Maybe this country doesn’t really need casinos. It should not be the main focus of the tourism industry,” says Suranand Vejjajiva, a top advisor in the governments of Thaksin Shinawatra and Yingluck Shinawatra. “I’m not against the IR concept but against the way the government is doing it now.”
Suranand suggests licensing one IR as a pilot project to see if it’s feasible and to determine what guardrails are needed. He believes Pattaya, a beach resort two hours from Bangkok with 10,000 hotel rooms served by U-Tapao international airport, would be the right location.
A rail link is supposed to connect U-Tapao to the two Bangkok airports and the high-speed train network in Thailand and neighbouring countries.
“We don’t want the Golden Triangle,” Suranand says, alluding to an infamous casino area in Laos, allegedly run by Chinese underworld figures notorious for loan sharking and kidnappings.
“If we can control it, regulate it and tax it, it could be beneficial,” Suranand says. “The government should have a sin tax of 30%-40% and use it to educate people on gambling addiction.” The government has proposed a gaming tax in the mid-teens.
Overblown fears
Crosio thinks fears about the negative impact of IRs are overblown. “Criminal elements are already present. Casinos will not make one iota of difference. Will they degrade the rule of law in Thailand? No.”
The attorney, who first worked in Thailand in the 1990s, adds: “Thailand will not become a centre for money laundering. It’s easier elsewhere.”
Regarding the IR process, he says: “The insiders are known and the lobbying has begun. They’ll come to an arrangement that works for everyone. Thailand is good that way.”
Whether Thailand’s eventual arrangement will work for the world’s top casino developers and operators, however, remains in doubt at this point.
