Thailand to Move Forward on Casinos, but are Lawmakers Too Optimistic?

Gaming analysts at G2E Asia said Thailand must be more realistic about the potential of a casino industry in the country. Vitaly Umansky, Daniel Cheng and Paul Bromberg warn that this will not be Singapore.

Thailand to Move Forward on Casinos, but are Lawmakers Too Optimistic?

On June 5, Bloomberg reported that Thailand will in fact move forward with its efforts to legalize casinos in the country as it looks to bolster its tourism industry and generate more state revenue.

According to the report, the government’s Finance Ministry has been instructed by Prime Minister Srettha Thavisin to draft a legislative framework for the establishment of entertainment complexes centered around gaming. The government estimates that these complexes could generate tax revenues of more than US$300 million in their first year of operation.

The potential development of the market was a topic of discussion at last week’s Global Gaming Expo (G2E) conference in Macau. One panel of experts posited that lawmakers in Thailand should rein in their expectations about a proposed casino industry in the country.

According to GGRAsia, Vitaly Umansky of Seaport Research Partners said governments that are new to gaming “look at Macau and Singapore, and their first attempt is to replicate one of those two industries.”

But, he cautioned, those “are entirely unique geographic and political constructs that are very difficult to replicate in most other countries around Asia and the rest of the world.”

In March, 253 of 257 Thai House members voted in favor of a feasibility study on IRs. Thavisin supports the initiative, which could curb illegal gambling, beef up government coffers and attract foreign investment and tourism. The Finance Ministry is currently reviewing a proposal that could OK the development of integrated resorts (IRs) with casinos in up to eight locations around the country.

Analyst Daniel Cheng, acknowledging that legalization likely “could happen as soon as early next year,” pointed out that Japan had a similar outsized projections when it legalized IRs in 2016. The country planned three mega-IRs in the first phase of development, and government officials as well as gaming analysts predicted the jurisdiction could rival Macau for revenues. One figure bandied about at the time: $25 billion per year.

Those high hopes were dashed by the onset of Covid-19 and other factors, including regulations perceived by some as too constraining. Ultimately, only one of three available IR licenses was granted, to MGM Osaka, which is expected to open its multibillion-dollar resort on Yumeshima Island in 2030.

According to GGRAsia, Umansky said casinos in Thailand face need a strong regulatory framework to attract major investors, but added that operators may be wary of doing business in the country, which does not offer a “stable” political environment “where an operator can come and commit billions of dollars in investment.”

He added, “I’m very skeptical at this stage that Thailand is going to have the wherewithal to actually create an industry with scale.” In practice, Thailand could be “a little bit more like the Philippines, with numerous casinos that are of smaller scale, and is effectively a suboptimal market for what it potentially could be.” Umansky also took issue with the potential minimum investment of US$3 billion or more. Even Macau started small, he said.

Paul Bromberg of Spectrum Gaming Group said eight IRs in a new market “would be a mistake, especially initially,” and added that no multibillion-dollar project in Thailand would be ready by 2030.

Meanwhile, Singapore’s gaming industry is poised for continued growth, reports Praveen Choudhary, managing director of Morgan Stanley Asia Ltd.

Its two IRs, Marina Bay Sands and Resorts World Sentosa, generated some $4.5 billion in 2019 and $5.3 billion in 2023. Morgan Stanley projects that the figure will reach $6.9 billion this year.

“Singapore has two things going on for them,” said Choudhary. “One is inflation, and the second one is its wealth. There’s a lot of money flowing there. It’s at the center of Asia right now, and I don’t think that’s going to change in the near term.

“A lot of mainland people used to keep their money in Hong Kong. Some of that money is going to Singapore. So it’s a structural benefit that Singapore has,” Choudhary noted.

Meanwhile, among U.S. operators, Wynn Resorts, MGM and the Las Vegas Sands Corp. all have expressed interest in Thailand, without suggesting a commitment.

In an investors’ note, Umansky wrote, “This market is too early in the process to gauge (interest), … but at present, our thinking on Thailand is that the market will not be ready for the U.S. regulated operators to be involved.”

Sands Chairman and CEO Robert Goldstein has described Thailand as a “very, very exciting market” but added, “It’s early days … we still have work to do with the numbers and understanding it.”