The National Court of Thailand has released a draft rule allowing casinos to obtain an initial 30-year license, with the possibility of a 10-year renewal.
According to the draft rule, these casinos will be integrated with large entertainment complexes, including hotels, convention centers, and amusement parks. The public feedback period for the draft rule is open until August 18.
Prime Minister Srettha Thavisin, who took office less than a year ago, supports the legalization of casinos to improve regulation and taxation. This move aligns with his broader strategy to attract foreign investment to Thailand. The draft legislation is part of Thailand's efforts to revive its tourism industry, which has been severely affected by the COVID-19 pandemic.
Regulatory Framework
This detailed 22-page draft bill outlines plans for developing large entertainment venues with casinos at locations determined by the Thai government. The draft suggests setting a "reasonable" entry fee for Thai nationals, similar to the model in Singapore, and recommends that the casino area should not exceed 5% of the total project area. The remaining space should be used for associated hotels and entertainment facilities.
After cabinet approval, the bill will be discussed in parliament and may be amended. If legalized, Thailand could see its first casino-inclusive resort by 2029, while MGM Resorts International's $10 billion IR development in Osaka is expected to be completed by 2030. According to brokerage firm CLSA, a legalized Thai casino market could generate an annual total gaming revenue of $15.1 billion (€13.8 billion), making it the third largest in the world.
Global Interest & Economic Potential
The move to legalize casinos in Thailand positions it to compete with other countries like the UAE and Japan, which are also vying for a share of the global casino market. According to IBIS World, the market generated about $263 billion (€241 billion) in revenue last year. Major international casino operators, including Galaxy Entertainment Group, MGM Resorts International, and Las Vegas Sands Corp., have expressed interest in expanding to Thailand if the market opens.
The country's House of Representatives, which has 500 members, has already supported a study by a group of legislators recommending the establishment of legalized casinos within large entertainment venues. This strategy aims to attract high-spending tourists and boost annual tourism revenue by about $12 billion (€10.9 billion).
Liberalization & Modernization Efforts
Although Thailand is a conservative Buddhist society where most forms of gambling are currently illegal, the proposed casino legalization aligns with recent liberalization trends. In 2022, Thailand became the first country in Southeast Asia to decriminalize cannabis. It is also poised to become the first in the region to legalize same-sex marriage.
The draft bill stipulates that large entertainment venues with casinos should be located in designated areas and operated by companies registered in Thailand, with a minimum paid-up capital of 10 billion Thai baht (€259.4 million). The draft also proposes the establishment of a policy group for integrated entertainment venues led by the Prime Minister and the creation of a regulatory authority.
Strategic Location
Tourism is crucial to Thailand, accounting for about 20% of total employment and approximately 12% of the country's $500 billion (€458 billion) economy. According to government data, the number of foreign tourists surged by about 34% to over 20 million by July.
According to various reports, potential locations for the new entertainment complexes include Greater Bangkok, Phuket, Chiang Mai, and Chonburi, the latter being the location of the popular seaside resort of Pattaya. These venues must be located within 100 kilometers of a major airport to enhance accessibility for international tourists.
Brokerage firm CLSA predicts that Thailand's potential legal casino market could generate an annual total gaming revenue (GGR) of $15.1 billion (€13.9 billion), making it the third largest casino market in the world. This optimistic forecast relies on expected growth in Thailand's tourism industry, particularly from visitors from China and India, and favorable regulatory conditions.
Analysts at CLSA estimate that Thailand could attract 39 million tourists annually, with an average spend of $386 (€356) per person. The country's relatively low 17% gaming tax rate and the lack of strict limits on the number of gaming tables and slot machines could lead to an approximate 40% EBITDA margin, comparable to integrated resorts in Singapore like Marina Bay Sands and Resorts World Sentosa.
Economic Impact and Investment Return
CLSA's report translates these figures into an annual total gaming revenue (GGR) of $2.1 billion (€1.9 billion) per integrated resort, with an EBITDA of $805 million (€743.6 million), and a return on invested capital (ROIC) of 23.9%, with a payback period of about four years once fully operational. This significant economic potential makes Thailand an attractive market for international casino operators.
The Thai government is actively working to enhance tourism infrastructure, which is expected to increase its appeal to major markets, especially China and India. In 2019, these two countries accounted for 33% of Thailand's tourists, but their current travel penetration rates are only 0.8% for China and 0.1% for India, indicating significant growth potential.
Comparison and Market Dynamics
While optimistic about the prospects for Thailand's casino market, CLSA does not expect this to significantly impact Macau's dominant position in the global gaming industry. CLSA's research notes that the differences in tourist characteristics and market supply between Macau and Thailand are expected to allow both markets to thrive simultaneously. Macau's mature gaming infrastructure and unique cultural heritage provide a different experience from Thailand's emerging market.
