While Taiwan has long been a venue of interest among foreign casino investors, the effort to bring casino gaming to Taiwan has been a journey of stops and starts over the past 25-plus years. There has, however, been fairly steady progress since 2009, when the government of Taiwan passed amendments to the Offshore Islands Development Act which permitted island counties to create casino-anchored tourist zones if such zones were approved by a majority vote in a county-wide referendum.
In 2009, the Taiwanese island of Penghu held a public referendum on the establishment of casino-based tourist zones, but the referendum failed. However, in 2012, the frontline island of Matsu held a referendum that passed. While the success of Matsu’s referendum was supposed to politically incentivize the Taiwanese government to pass gaming legislation regulating casino operations, and the government did retain a law firm to draft the Tourism Casino Administration Act (the “Act”), the Act has been stalled in Taiwan’s legislature since 2013.
Fast forward to 2016, and Penghu is once again preparing to hold a casino gaming referendum, and a second frontline island – Kinmen – has recently started the referendum process. Much has changed since 2009, and even since 2012, most of which suggests that the 2016 Penghu referendum could pass, and could then motivate Taiwan’s legislature to pass the Act. Particularly encouraging are the following developments:
1) The 2016 Penghu referendum is supported by the Penghu County Magistrate (Governor), who is a member of the Democratic Progressive Party—the current ruling party in Taiwan;
2) The 2016 Penghu referendum is expected to garner the support of Penghu’s representative in the Taiwan legislature, who is also from the DPP;
3) The provisions of the draft act address all of the issues raised by anti-gaming forces in the 2009 Penghu referendum. This was an important factor in the success of the 2012 Matsu referendum;
4) The new DPP government was elected on a platform of improving the economy and creating jobs in an economy that has been moribund for years. While the DPP has previously opposed the establishment of casino gaming in Penghu, the Penghu referendum and the draft Act provide an opportunity for the DPP to bring billions of US dollars in investment and thousands of jobs into Taiwan’s underdeveloped offshore islands;
5) Prior to the recent elections, the DPP actually made comments on the draft Act. This indicates that, even before the election, the DPP was willing to engage on the issue of the conditions under which the casino gaming industry would operate on the offshore islands. While some of the proposals made by the DPP with respect to the number of licenses, minimum investment amount and taxes to be imposed would be problematic for foreign casino operators, such proposals were clearly made as opening positions and may not reflect the final positions that the DPP would be willing to accept on such issues.
So, given the foregoing and given the imminence of the Penghu referendum, the question is – will this be a repeat of 2009, or will it herald an era of casino development in Taiwan? As the GMA paper illustrates, the former is possible, but there is ample reason to be optimistic about the latter.
The full text of the Taiwan White Paper can be found at the following link: http://globalmarketadvisors.com/wp-content/uploads/2016/06/GMA-Taiwan-White-Paper.pdf
Bill Bryson is a former casino development executive, and a partner based in the Taipei office of Global Market Advisors
