Thailand builds 'fun economy' with casinos to boost Covid recovery
Date: 2024-08-08 Author: Alex Crawford Categories: CASINO
In 2019, foreign tourists accounted for about 60% of Thailand's total tourism spending, equivalent to 2.204 trillion baht. The Covid-19 pandemic has slashed that revenue, and the southeast Asian nation has yet to fully recover.
After being elected last year, Prime Minister Sretta Taweesin likened the post-pandemic economy to a "sick person", warning that the market was "recovering so slowly that there is a risk of economic recession. We need to stimulate the economy and spending."
Legal casinos, previously unthinkable in the mainly Buddhist kingdom, are a key part of the prime minister's recovery plan. Taweesin supports casinos as a way to not only boost tourism and investment, but also eliminate illegal gambling.
“If they can go to legal casinos, why would people continue to break the law?” he asked at a March 28 press conference. “Players can try their luck at legal casinos.”
In March, members of parliament voted almost unanimously to back his initiative. In a 253-3 vote, the bill was approved, which could lead to the creation of up to eight casino resorts in the country.
Entertainment Economy
In a proposal released Aug. 5, lawmakers outlined efforts to create an “entertainment economy” that emphasizes entertainment, sports, and conventions. Specifically, they described large resorts with casinos.
Under the Full-Scale Entertainment Business Act, the resorts would include non-gaming amenities such as hotels, shopping malls, restaurants, and nightclubs. Other proposed attractions include sports arenas, yacht clubs, amusement parks, and cultural exhibitions.
Licenses will be available to limited liability companies or public joint stock companies registered in Thailand. Each applicant will need to prove a paid-up capital of at least 10 billion baht.
Popular tourist destinations such as Phuket, Chiang Mai and Chonburi are strong contenders for the resorts, with two resorts potentially being built in Greater Bangkok.
Analysts compare Thailand and Singapore
In a report on the potential market, CSLA analysts called Singapore a “good proxy for Thailand” due to its similar geography and overall attractive image.
They said Thai casinos are “well positioned to deliver similar EBITDA margins” – around 40% versus 50% in Singapore. At maturity, they estimate that Thailand’s gambling industry could generate up to 536.6 billion baht a year.
The proposed gaming licenses would be valid for 20 years, with the option to extend for a further 10 years. Gross gaming revenue (GGR) will be taxed at 17%. Licensees will have to invest a minimum of 96 billion baht to enter the market.
Economic boom
Four of Macau’s six largest concessionaires are likely to participate: Galaxy Entertainment Group, MGM Resorts, Las Vegas Sands and Wynn Resorts. Melco and SJM are unlikely to participate due to financial constraints.
According to a study presented to the Thai parliament, casinos could increase average tourist spending by 52%. This increase could increase GDP by one percentage point. The new industry could also create 30,000 new jobs at each resort.
If approved, the first entertainment complexes could open as early as 2029. Public consultations on the bill are ongoing until August 18.
