Thailand desires to attract tourists by constructing casinos

Thailand is working on a brand new technique to increase foreign visitor numbers and tourism spending: casinos.

The strategy has worked for Macau – the overtakes Las Vegas because the world's largest gambling center – and Singapore with two successful, 14-year-old casinos.

If Thailand's bill is passed, the country may very well be Macau and Singapore's biggest competitor by the tip of the last decade, industry observers told CNBC.

“They've seen what the construction of casinos has meant for Singapore and the power of the gambling dollar in Macau. If Thailand gets it right, it could increase its attractiveness as a destination,” said Ben Lee, managing partner of IGamiX Management and Consulting.

Tourism is a significant driver of Thailand's economy, but growth stays sluggish. Tourist numbers haven’t fully recovered from the Covid-19 pandemic, and won't until Chinese travelers particularly return in full force.

Southeast Asia's second-largest economy welcomed around 28 million foreign visitors in 2023, a far cry from the nearly 40 million tourists in 2019.

“Thailand is a tourism juggernaut, it is the only tourism market in the region that everyone fears. But the country is still struggling to recover its economy from the pandemic,” Lee said.

In June, former Thai Prime Minister Srettha Thavisin ordered the drafting of a law to legalize entertainment complexes within the country, a move that might boost tourism spending, increase employment and revitalize the economy.

Apart from state-run lotteries or licensed horse racing, gambling is currently illegal in Thailand.

Although Paetongtarn Shinawatra has since replaced him as Thailand's latest Prime Minister, experts consider the bill is prone to be implemented.

“Thailand's political situation is in flux, but that is unlikely to put a damper on plans to build casinos,” said Yin Shao Yang, an analyst at Maybank Investment Bank.

If the law is passed, Thailand's casinos could generate revenue of 187 billion Thai baht ($5.5 billion), or 1 percent of the country's GDP, in line with a study by Maybank.

The Thai economy grew by 1.9% in 2023 and is anticipated to grow by 2.7% this 12 months. the Ministry of Finance announced.

“Tourism in Southeast Asia is highly competitive and countries in the region are looking at how they can position tourism as a pillar of economic diversification,” said Gary Bowerman, director of travel and consumer information company Check-in Asia.

“Legalizing casinos will put Thailand in a stronger position in the future simply because the tourism economy is already so large and has so many visitors,” Bowerman said.

The query most often asked by industry observers is by which Thai cities these casinos is perhaps positioned.

Although the federal government has not yet publicly announced the proposed locations, analysts consider they will not be in the guts of the capital Bangkok.

“Bangkok is already developed and there is no need for further development. I cannot imagine there being any more wasteland in Bangkok,” said Maybank's Yin.

He added that casinos can be inbuilt less populated areas, reminiscent of along Thailand's Eastern Economic Corridor, where Rayong, Chonburi and Chachoengsao are positioned.

This is different from the Macau model, where “a number of casinos like in Las Vegas are located close together,” Allan Zeman, chairman of real estate developer Lan Kwai Fong Group, told CNBC.

“Many governments want casinos in underdeveloped areas because they believe it promotes development,” he said. “But if you have just one casino in a developing city, it doesn't work that way anymore.”

Casinos are also expected to be positioned in other popular tourist destinations reminiscent of Phuket, Krabi, Chiang Mai and Pattaya, added Yin of Maybank.

“The government would want to squeeze out the highest investment spending [capital expenditure] from the Pattaya project,” Yin said, expecting $5 billion to be spent there.

As part of a broader initiative 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 would likely follow Singapore's model and build an integrated resort that also offers activities for non-gamers.

“Look at Marina Bay Sands. It has a fantastic bar, an infinity pool, hotels, museums and restaurants. Even young people who don't come to play can benefit from it.”

A draft of the Entertainment Complex Act was published by local media Bangkok Post In August, it was announced that Thai citizens wishing to visit casinos in their country would have to pay an entry fee of 5,000 Thai baht (US$147). This is comparable to casinos in Singapore, where locals have to pay 150 Singapore dollars (US$115) to enter. Entry is said to be free for foreigners.

The proposed rules also include requiring casinos to obtain a valid operating license for up to 30 years and requiring operators to pay 5 billion baht for registration, in addition to an annual payment of 1 billion baht.

Bowerman stressed that the Thai government may require U.S. operators seeking to enter Thailand's gaming industry to partner with Thai companies.

“There will be a legitimate local interest and Thai companies will be keen to get involved,” he said.

Casino experts agree that if Thailand successfully builds five to eight casinos across the country, it could eventually overtake the Singapore market in terms of popularity and total revenue.

But Macau’s casinos will continue to be the frontrunners, it is said.

Macau casino revenues for the first half of the year totaled 114 billion Macau patacas ($14.16 billion), while the two casinos in Singapore brought in $2.53 billion in the same period, according to earnings releases from the respective operators.

“If Thailand's casinos are built properly, there isn’t any doubt that it’s going to have the potential to overtake all other gaming jurisdictions in Asia, aside from Macau,” said IGamiX's Lee, adding that it could “come very close” if Thai casinos are well managed.

Bowerman reiterated his comments, saying Thailand is starting with a “blank sheet of paper” and will certainly attract major U.S. investors.

“The casino industry could be very lucrative and can herald a number of money. That will generate a number of revenue and tax revenue to fund various elements of tourism,” he told CNBC.