Thailand casino progress leapfrogs Japan, still faces big obstacles

Following nearly unanimous parliamentary support and cabinet approval, Thailand’s casino legalisation process has the momentum to meet Prime Minister Srettha Thavisin’s target of opening a casino within two years. This is the first step toward establishing “entertainment complexes” with gaming in tourist areas across the kingdom.

Thailand’s speedy progress contrasts Japan’s glacial advance toward casino gaming. Successful legalisation efforts in the world’s third largest economy commenced in 2013. Final legislative approval came in 2018. The first licence was granted in 2023, and an integrated resort is not expected to open before 2030. Two more authorised licences remain unassigned. Local and national officials are each apparently waiting for the other side to take the initiative.

Thailand appears likely to open its first IR ahead of Japan. “We are looking at a smaller bite out of the apple and a much more flexible – if not transparent – government partner.” The Innovation Group president, Michael Soll, says.

Like Japan, Thailand has considered casino legalisation for decades without significant progress until now. “Considering 99% of the parliament just voted to approve casino gaming, I feel they are going to get it right this time.” FootballBet.com chairman and CEO David Leppo says.

The government’s framework includes up to five licences for entertainment complexes – Thailand’s term for integrated resorts. Complexes will be within 100km of international airports, have a 20-year licence term, a minimum investment of 100 billion Thai baht ($2.8bn/£2.17bn/€2.52bn) and a 17% gaming tax rate. This will bring government coffers welcome revenue. The overriding goal, however, is to boost tourism.

Thailand: Open for pleasure

Thailand attracted 40 million international visitors in 2019, ranking eighth globally in arrivals and fourth in visitor receipts at $61bn. Last year, even though previous top source market China provided just 3.5 million arrivals compared with 11 million in 2019, foreign visitors reached 28 million, 70% of 2019’s number. Tourism receipts in 2023 were $34bn, though, just 56% of 2019. Thailand hopes IRs will attract higher-yielding visitors.

“Integrated resorts are proven models that drive investment, tourism and jobs with gaming as the economic engine.” B Global managing partner Brendan Bussmann says. “There are plenty of opportunities to have various aspects that will drive additional tourism, building upon the existing infrastructure for Thailand to use IRs as a vehicle to enhance their existing landscape.”

“There hasn’t been very much innovation here for a long time,” a seasoned Thailand hospitality hand says. “Casino legalisation is about attracting the right blend of tourists, not pot stores with backpackers getting stoned.”

When Thailand legalised cannabis sales in 2022, many envisioned restrictions, and benefits vanished amid hasty approval. With casino gaming, experts inside and outside Thailand say the kingdom must grapple with several difficult issues that could delay or derail the initiative. Resolving those issues will require diligence and compromise to craft uniquely Thai solutions.

Singapore model with Thai characteristics

Many proponents of casino legalisation mention “the Singapore model”. But there’s a vast range of opinion on what that means and how it applies to Thailand.

“The real test for the Srettha government to legalize the casino business will be in establishing an internationally acceptable regulatory environment which will attract blue chip operators.” Bangkok-based strategic communications consultant Julian Spindler says.

Citing Singapore’s coup of a Southeast Asia exclusive for Taylor Swift’s Eras Tour performances, Spindler adds, “Since our prime minister has already absorbed a ‘Swiftie’ lesson from Singapore, he should follow their huge success in establishing world-class integrated resorts.”

Singapore’s integrated resorts Marina Bay Sands (MBS) and Resorts World Sentosa (RWS) are seen as prototypes for casino legalisation as a tool to boost tourism. The revenue-generating power of gaming enables creating resorts with spectacular non-gaming features. This includes the rooftop infinity pool and observation deck at MBS and the region’s first Universal Studios theme park at RWS, both appeal to tourists as well as locals.

“They say we want to have Singapore-style regulation, which I think they mean in terms of having the integrated resort model,” a top casino industry executive with extensive experience in the US and multiple Asian markets requesting anonymity says. “How far it goes beyond that still remains to be seen.”

Singapore’s integrated resorts application process included many mandates and options for licence aspirants. This includes iconic architecture, a theme park and convention facilities. Singapore dictated the site for each IR and restricted the size of its casino.

Going for gold standard

Less visibly, Singapore established regulations for ownership, employees and vendors similar to those in Las Vegas. Which can be considered the global gold standard. Singapore effectively banned junket promoters by subjecting them to those same probity requirements.

The city state imposed a two-tiered tax system for mass market and VIP gaming revenue, plus an entry fee for Singapore citizens and permanent residents. This is collected by casinos on behalf of the government. It also established a National Council on Gambling to mitigate social impacts of gaming expansion.

“Thailand would be wise to adopt many of the principles that have made Singapore successful from a regulatory standpoint. It should then adapt them to the circumstances of legalised gaming in Thailand,” Spectrum Gaming Group managing director Fredric Gushin says. This is while “recognising the differences between countries can be significant.”

Gushin, who oversaw 12 Atlantic City casino openings as a top official with New Jersey’s Division of Gaming Enforcement, suggests Thailand should undertake “serious efforts dedicated to gaming licensing (regarding beneficial ownership of resorts), anti-money laundering, socially responsible gaming and the increasingly important issues related to human trafficking.”

“I would advise the Thai government of the importance of engaging specialist advisers with detailed integrated resort policy and regulatory experience,” The Agenda Group regulatory affairs director Peter Cohen, former head of gaming oversight in Victoria, Australia, says. “IRs exist in Macau, Singapore, Las Vegas, Melbourne and very few other places.”

What will Uncle Sam say?

One key question is whether Thailand’s regulations will enable participation by operators in jurisdictions such as North America, Singapore and Australia without risking their existing licences.

“This is the biggest issue for the government to address,” Destination Capital CEO James Kaplan says. “US operators bring a cachet and marketing machine to the business with a broader international draw.”

But Bangkok-based Kaplan adds, “The (Thai) market is so compelling that the regional players or a homegrown operator will make this a success.” Sources tell iGB that leading Thai business groups are also showing interest in IR development, quite unlike Japan.

A key determinant of Thailand’s regulatory rigour will be how it chooses to address its existing gaming industry. The national lottery and a limited horse racing calendar are Thailand’s sole legal gambling outlets. This is complemented by a vast array of illegal wagering, ranging from unofficial lottery tickets to underground casinos. Many casinos catering to Thai players ring the kingdom’s borders with Cambodia, Laos and Myanmar, all featuring Thai investors.

Temporary blindness

“We need to integrate the current gaming stakeholders,” Suranand Vejjajiva, a top insider in the governments of Prime Ministers Thaksin Shinawatra and Yingluck Shinawatra, says. “I would like the government to make clear to present illegal operators that they must enter the system. There is a place for them to operate legally – turning a blind eye to what they are doing at present. And of course, a stronger punishment after if they continue with illegal operations.”

“The process toward legalisation and development should seek out industry input, but the decision making should be based on a variety of factors including having clear public policy objectives and regulations that will attract investment and quality operators,” Gushin, whose firm advised Singapore on its regulatory regime, says. “Final decision making is the sole responsibility of the government. Taking into consideration the viewpoints of various stakeholders – one of which will be the existing gaming industry.”

“Success can be defined as having the right elements involved as opposed to the wrong ones,” the C-level US and Asia seasoned casino executive says. “The question is whether the legitimate operator can effectively compete with the illegitimate operator.”

In the early days of Macau’s casino liberalisation, this executive says, “there was a regulatory structure but it really wasn’t all that well regulated. (Las Vegas operators) were able to keep their licences, but there was a lot going on that they knew was going on. More than half that income went to the illegitimate guys,” referring to Macau’s junket promoters. “It took Macau 20 years to get rid of the illegitimate guys.”

Trimming grassroots opposition

Grassroots opposition fuelled by fears of criminal elements and gambling addiction helped derail Japan’s IR licensing. Similar public opposition remains a threat to Thailand’s ambitions.

“Religious and social issues will stimulate debate, which is important. From that debate, compromise and solutions will be agreed,” Kaplan, whose firm specialises in hospitality properties, says. “I believe there is sufficient local momentum at the political and populace base (levels) to mitigate public opposition.”

Issues go beyond religion and morality, Suranand says. “If the government is seen as giving out licences to the big conglomerates and is not clear about the benefits to the local provinces, then opposition will be stronger. At the same time, illegal gambling and online betting are rampant. Casinos will not solve those problems without strong government policy and law enforcement.”

Authorities have stepped up raids on illegal gambling rings across the country in recent months, Gushin notes. “Indicating how serious the government is in its efforts to legalise IRs in Thailand.”

Effectively combatting illegal gambling and keep gaming spending at home means allowing local play. “I support Thai nationals to be able to play at the facilities in Thailand,” Suranand says. “We have so many Thais traveling to Cambodia to gamble. It does not make sense to let them continue to do that.”

Pay for local play

The former cabinet minister supports an entry tax for Thai nationals. This mirrors Singapore’s practice, reflecting a consensus among experts responding to iGB.

“I was concerned until I saw it in Singapore,” the longtime bi-continental executive says. In practice, the entry fee “just means you don’t wear out the rugs as much.” This would weed out locals who can’t afford to play.

“Barring locals would be a problem,” Kaplan says, but crafting local play regulations will take time. “We will likely follow Singapore, but the Thai version will be Singapore-plus, with added requirements and family protection procedures.” He suggests “clear and objective” rules including a minimum income level for gaming and responsible gaming measures.

“The funds generated for any entry fee should, at least in part, be dedicated by the government to create a viable socially responsible gaming program to minimise any harm that might be created by the legalisation of gaming in Thailand,” Gushin says.

As for the timing of a casino opening, Vietnam-based Inspire Advisory Group managing director Jason Turnbull says, “Based on my experience the timetable of two years will be challenging, with temporary sites being established while more long-term solutions are developed.

“If the authorities engage appropriately qualified and experienced experts and engage internationally proven best practices with laws and governance requirements to support the process then they have every opportunity to ensure a relatively smooth transition process.”

Two years too fast?

David Leppo, who has doing business in the Mekong region since 2010, says two years is too fast. “In speaking with politicians, religious experts and conservatives during the last three to four years, all agree the dynamics relating to political, royal, religious and law enforcement beliefs and egos that must be addressed and convinced are multilayered and must be dealt with strategically. Four to five years is more realistic.”

“My timetable is faster,” Kaplan, who last year predicted approval within three years, now says. He projects the government will solicit bids for licences late this year or early next year. This will see awards given by June 2025.

That would leave the winning bidders eight months to open a casino within the government’s two-year timetable. Most likely in temporary facilities while IRs are under construction.

Next in Part 2: Profiling Thailand’s integrated resort possibilities

Former US diplomat and current iGB Asia editor at large Muhammad Cohen has covered the casino business in Asia since 2006, most recently for Forbes, and wrote Hong Kong On Air, a novel set during the 1997 handover about TV news, love, betrayal, high finance and cheap lingerie.