If a casino is built in the Thai city of Pattaya, it could attract an influx of tourists.
Boonchai Wedmakawand | Moment | Getty Images
Thailand is working on a new strategy to boost foreign tourist numbers and tourism spending: casinos.
The strategy has worked well in Macau, which has overtaken Las Vegas as the world’s largest gambling center, and in Singapore, where two thriving casinos have been operating for 14 years.
Industry insiders told CNBC that if Thailand’s bill passes, it could make the country a major competitor to Macau and Singapore within a decade.
“We’ve seen the impact casino construction has had in Singapore and the power of gambling in Macau. If Thailand gets it right, it could become a more attractive tourist destination,” said Ben Lee, managing partner at Aigamix Management and Consulting.
Tourism is a key driver of Thailand’s economy, but growth remains sluggish, with visitor numbers still not fully recovered from the COVID-19 pandemic and unlikely to recover until Chinese visitors, in particular, return in earnest.
Southeast Asia’s second-largest economy is expected to welcome about 28 million foreign tourists in 2023, a far cry from the roughly 40 million tourists it received in 2019.
“Thailand is a tourism powerhouse and the only tourism market that everyone is scared of in the region. But it is still struggling with its economic recovery from the pandemic,” Mr Lee said.
In June, Thailand’s former prime minister, Surendra Tavishin, ordered the drafting of a bill to legalize entertainment venues in the country, a move that could boost tourism spending, increase jobs and reinvigorate the economy.
Gambling is currently illegal in Thailand, with the exception of the state lottery and licensed horse racing.
His daughter, Paethontar Shinawatra, is now Thailand’s new prime minister, but experts say the bill is still likely to be implemented.
“Thailand’s political situation is fluid, but that is unlikely to slow down the casino plans,” said Yin Xiao Yang, an analyst at Maybank Investment Bank.
If the law passes, Thailand’s casinos could generate 187 billion Thai baht ($5.5 billion) in revenue, equivalent to 1 percent of the country’s GDP, according to a Maybank study.
The Thai economy is expected to grow 1.9% in 2023 and 2.7% this year, the Finance Ministry said in a statement.
“The tourism industry in Southeast Asia is competitive and countries in the region are looking for ways to position tourism as a pillar of economic diversification,” said Gary Bowerman, director of travel and consumer information company Check-in Asia.
“Thailand’s tourism economy is already large and draws a lot of tourists, so legalizing casinos would put Thailand in a stronger position going forward,” Bowerman said.
What to Expect
The most common question from industry watchers is which Thai cities these casinos might be located in.
The government has not disclosed the proposed location, but analysts predict it may not be in the center of the capital, Bangkok.
“Bangkok is already developed and there is no need for further development. I can’t imagine there is any more vacant land in Bangkok,” said Maybank’s Yin.
He added that the casinos would be built in sparsely populated areas such as along Thailand’s Eastern Economic Corridor, which includes Rayong, Chon Buri and Chachoengsao.
This is different from the Macau model, where “you have a lot of casinos packed together like in Las Vegas,” Alan Zeman, chairman of property developer Lan Kwai Fong Group, told CNBC, adding that he was skeptical of the future success of casinos in Thailand.
“Many governments like to put casinos in developing regions because they think that casinos will help development,” he warned. “But having one casino in a developing city doesn’t have the same effect.”
Aerial view of Phuket coastline.
Somnuk Krobukkum | Moment | Getty Images
Maybank’s Yin added that casinos are also planned in other popular tourist destinations such as Phuket, Krabi, Chiang Mai and Pattaya.
“The government will want to squeeze the best capital investment out of it. [capital expenditure] We expect $5 billion to come from the Pattaya project,” Mr Yin said.
As part of a wider effort to expand capacity for tourists flying into Pattaya, U-Tapao-Rayong-Pattaya International Airport announced in March that it would build a second runway, local media reported.
Check-In Asia’s Bowerman added that Thailand will probably follow Singapore’s model and build integrated resorts that also include activities for non-gambling people.
“Look at Marina Bay Sands. They have a great bar on the top floor, an infinity pool, a hotel, a museum and restaurants. Young people who don’t come to gamble can also benefit.”
A draft entertainment venues bill published by local media Bangkok Post in August would require Thai citizens to pay an entrance fee of 5,000 baht ($147) to enter casinos in the country, roughly the same as in Singapore, where locals must pay 150 Singapore dollars ($115) to enter. Foreigners would reportedly be allowed in free of charge.
The proposed rules stipulate that casinos would need to obtain a valid license to operate for up to 30 years and that operators would have to pay 5 billion baht for registration, on top of an annual payment of 1 billion baht.
Bowerman stressed that the Thai government could stipulate that any U.S. operators wanting to enter Thailand’s gambling industry must work with Thai companies.
“There are vested local interests and Thai companies will want to be involved,” he said.
Will Macau continue to hold onto its number one spot?
Casino experts share the view that if Thailand succeeds in building five to eight casinos across the country, it could eventually overtake the Singaporean market in popularity and total revenue.
But Macau’s casinos will still retain their top spot, they say.
Macau’s casino revenue reached 114 billion Macau patacas ($14.16 billion) in the first half of this year, while Singapore’s two casinos made $2.53 billion in the same period, according to financial reports from casino operators.
The Macau government relies on casinos for more than 80% of its revenue, and the majority of its residents are employed directly or indirectly by the casino industry.
Dragon for Real | Moment | Getty Images
“If Thailand’s casinos are set up properly, they definitely have the potential to overtake all other gambling jurisdictions in Asia except Macau,” said IGamiX’s Lee, adding that if run properly, Thailand’s casinos “can even get very close to Macau.”
Bowerman agreed, saying Thailand was starting with a “clean slate” and would certainly attract big U.S. investors.
“The casino industry is very profitable and will bring in a lot of money. It will generate a lot of revenue and tax revenue to fund the different elements of tourism,” he told CNBC.
