With King Bhumibol Gone, Thailand Could Reconsider Casino Legalization

Thailand has been widely recognized as the best potential market without legal casinos on the Asian mainland. There have been a number of proposals to bring casinos to Thailand to boost the economy, including a flare-up last year that put Sheldon Adelson’s Las Vegas Sands on the record as ready to build a multibillion-dollar integrated resort in Thailand under the right conditions. But the moment passed, amid strong interest in casino development from many business sectors, opposition from Buddhist groups and ambivalence from tourism stakeholders, all overlaid with Thailand’s deadlocked national political rift. The death of King Bhumibol Adulyadej on Thursday changes the political calculus in Thailand, which could lead to reconsideration of the casino question.

Losing King Bhumibol Adulyadej as a focus of national unity could lead Thailand’s divided politicians to seek reconciliation, paving the way to consider casino legalization in the Asian mainland’s best virgin market.

“Over the long-term, a newly elected government under the new monarch, or perhaps a strengthened military government, could green light the holy grail of gaming expansion in Southeast Asia,” Grant Govertsen, head of Asian equity research at Union Gaming, wrote in a research note. He doesn’t expect any discussion of casino legalization before 2018.

Indonesia, Brunei and Thailand are the only three ASEAN countries without legal casinos. Laos and Cambodia have casinos along their borders that rely on Thailand’s 65 million people to come play. In addition, experts estimate half of Thai adults gamble illicitly, betting hundreds of millions of dollars at illegal casinos inside Thailand or through the underground lottery.

Casino boosters hope to bring gambling out of the shadows and back over the border, where Thailand can tax the revenue, probably following Singapore’s model that sets an entry tax for local players to keep poor people out of the casino. As in Singapore, the declared primary target would be tourists. Overseas arrivals set a record last year at 29.9 million and are up 12% for the first eight months of this year, according to the Thai government’s Department of Tourism. International visitors spent $42.5 billion last year, accounting for about 10% of GDP.

Tourism stakeholders have been ambivalent about casinos. Some fear that casinos could overwhelm Thailand’s tourism selling proposition that’s working so well at present. There’s also a parochial element, since casino development will likely be restricted to a single tourist area, such as Pattaya or Phuket; other areas feel that would put them at a disadvantage. Las Vegas Sands says it wants to build in an urban or financial center – read Bangkok – a far less likely scenario that would suck even more of the nation’s wealth to the capital.

Buddhist groups opposing casinos have tried to associate themselves with the monarchy. The current government of Prime Minister Prayut Chan-o-cha, installed by the military following a 2014 coup, has also tried to portray itself as an ally of the monarch. The prime minister stepped in personally to douse last year’s casino flare up.

The casino question has been become enmeshed in Thailand’s larger political impasse. Thaksin Shinawatra, the business tycoon turned prime minister unseated in a 2006 coup, supports casino legalization. Euro-Asia Consulting President and CEO Stephen Karoul tells me he conducted a casino feasibility study for Thaksin’s government and says it planned to hold a national referendum on casinos. Thaksin’s ouster and subsequent clashes between pro- and anti-Thaksin forces have left Thai politics polarized and frozen with no interest in compromise. King Bhumibol represented a national identity above politics and that center held.

Now, politicians cannot be as confident that center will keep holding while they remain apart. Pro- and anti-Thaksin factions may find new impetus to seek reconciliation. Casino legalization remains a contentious issue and, with tourism numbers rising, not a particularly pressing one. Casinos won’t be the first topic on the agenda if Thailand can repair its political dysfunction, but until there’s a working political dialogue, casinos will never get a hearing.

Source: Forbes

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