Thai Legal Casino Sector Could Add 1 Percent to GDP, Says JP Morgan

October 3, 2024 Thailand Casino & Hotel Industry Updates

Thailand is positioning itself to enter the world of legalized casinos as part of a broader strategy to formalize its significant underground economy, which is estimated to make up as much as 50% of the country’s gross domestic product (GDP). A recent report from JP Morgan indicates that establishing legal casinos could potentially increase the GDP by 0.3 to 1 percent and boost tax revenues by 0.4 percent to 1.25 percent.

The push for casinos has gained momentum under Prime Minister Paetongtarn Shinawatra. Initially, the concept was absent from former Prime Minister Srettha Thavisin’s policy agenda when he took office in September 2023. However, it has now emerged as an urgent priority. This shift is part of the proposed “Entertainment Complex (EC) Bill,” which aims to integrate casinos into Thailand’s economic framework.

JP Morgan’s report, as cited by GGRAsia, underscores the government’s goal to expand the tax base by legalizing activities currently relegated to the underground economy, which reportedly includes around 0.6 percent derived from on-site gambling. Legalizing casinos aims to attract more foreign tourists and encourage foreign direct investment, a crucial component of Thailand’s economic growth strategy.

The draft legislation for legal casinos has already completed the public hearing process and is expected to be presented for parliamentary discussion later this year. If all goes according to plan, commercial operations could commence as early as 2032 or 2033.

JP Morgan also analyzed potential casino locations, identifying eight possible sites, with four in greater Bangkok and four others spread across the country. The banking group estimated that casinos in Bangkok alone could generate between US$1.5 billion and US$5 billion in revenue. This revenue could yield an earnings before interest, tax, depreciation, and amortization (EBITDA) ranging from US$400 million to US$1.5 billion, with an internal rate of return between 12 percent and 29 percent.

The potential for a legal casino sector in Thailand has attracted interest from various global and regional operators. Six organizations have expressed enthusiasm about entering the Thai market. Notably, the Royal Turf Club of Thailand plans to invest THB 200 billion (approximately US$6.21 billion) in a large-scale entertainment complex, potentially collaborating with the Royal Sports Complex and other foreign partners.

Several major casino operators are also eyeing opportunities in Thailand. Galaxy Entertainment Group Ltd, a prominent player in Macau, has shown interest, along with Hard Rock International. Edward Tracy, president of Hard Rock Asia, has stated that the company is “absolutely interested” in entering the Thai market.

Las Vegas Sands Corp, which operates Sands China Ltd in Macau, is another major contender. Chairman and CEO Robert Goldstein has confirmed the company’s keen interest in establishing a presence in Thailand. Similarly, MGM Resorts International, through its Macau-based entity MGM China Holdings Ltd, is planning a feasibility study to explore casino opportunities in Thailand.

Wynn Resorts Ltd is also actively considering options, with chairman and CEO Craig Billings announcing their interest in entering the Thai casino market.

Investment bank Morgan Stanley has weighed in on the potential economic impact of a legalized casino industry, estimating it could generate annual gross gaming revenue (GGR) of between US$4 billion and US$6 billion. This projection highlights the significant financial implications of integrating casinos into Thailand’s economy.

The prospect of legal casinos has sparked a range of opinions among the public and policymakers. Proponents argue that casinos could provide a much-needed boost to the economy, increase tourism, and create jobs. Critics, however, express concerns over potential social issues related to gambling addiction and the impact on local communities.

As Thailand moves closer to the potential legalization of casinos, the focus will be on how the government balances economic growth with social responsibility. The upcoming parliamentary discussions will be critical in shaping the future of the casino industry in Thailand.