Is legalizing casinos worth the gamble?

The Cabinet's approval of a draft law in mid-January aimed at establishing entertainment complexes, has reactivated the debate on the prudence of legalizing casinos.

Proponents view this initiative as a crucial step to boost tourism and regulate illegal gambling. They see it as a bold effort to attract international visitors while addressing the pervasive issue of underground gambling dens that have troubled the country for years.

Objectives of the draft law

The primary objective of this draft law is to legalize gambling within these entertainment complexes, thus creating a regulated environment that can attract tourists while generating revenue for the state.

This initiative aims to place Thailand on the global casino map, competing with established gambling hubs such as Las Vegas, Macau, Singapore, Malaysia, Cambodia, Laos and Myanmar.

Opponents concerned about the potential social impact have launched a campaign against the casino initiative. Both sides highlight the pros and cons of the initiative.

Benefits of legalizing casinos

Boosting tourism:Legal casinos are expected to draw a significant number of international tourists interested in gambling, providing a substantial boost to the local economy.

Revenue generation:The government can earn considerable revenue through taxes and licensing fees from casino operations.

Job creation:The establishment of entertainment complexes will create numerous job opportunities in various sectors, including hospitality, security, and retail.

Regulating gambling:Legalizing casinos will help manage and control gambling activities, reducing the influence of underground dens and associated criminal activities.

The downside

Economic concerns:Thailand Development Research Institute (TDRI) research director Somchai Jitsuchon argues that while legal casinos may attract more tourists, they may negatively impact the economy in the long run. “Gambling merely transfers money from one person to another without producing any real economic value,” he asserts.

Addiction risks:There is a significant risk that legalizing casinos could lead to an increase in gambling addiction among Thai citizens.

Corruption and loopholes:The policy could encourage corruption among politicians and policymakers, who might exploit loopholes for personal gain.

Lack of transparency:Managing the grey business of gambling in a transparent manner poses a challenge, potentially leading to governance issues.

Competition with other casino hubs

Thailand's move to allow legal casinos will position it in direct competition with some of the world's most famous gambling destinations. Las Vegas in the US and Macau in Asia are renowned for their grand-scale casinos and luxurious entertainment options.

Singapore has successfully integrated its casinos with family-friendly resorts like Marina Bay Sands. Meanwhile, Malaysia offers the famed Genting Highlands, and neighboring countries such as Cambodia, Laos and Myanmar are also emerging as popular gambling destinations due to their more relaxed regulations.

Thailand will need to innovate and offer unique experiences to compete effectively with these established hubs. The success of this initiative will hinge on how well Thailand can differentiate its entertainment complexes from those of its competitors.

Aat Pisanwanich, an expert on international trade and ASEAN affairs, has reservations about viability. “I don’t think Thailand can compete effectively with Singapore and Malaysia in attracting visitors to casinos, as these two countries have extensive experience in this area,” he says.

However, he believes that Thailand has the potential to attract more tourists due to its abundant natural resources, including beautiful beaches and rich cultural attractions.

In summary, while Thailand may face challenges in the casino sector, its diverse offerings in nature and culture could enhance its appeal as a tourist destination, he adds.

Criticism and alternative suggestions

TDRI director Somchai has been a vocal critic of the draft law, arguing that the government should focus on more productive and challenging projects that would strengthen the economy in the long run, rather than opting for quick-win solutions like opening casinos.

Investments in sectors such as technology, education and sustainable tourism could provide more substantial and long-term economic benefits, he suggests.

Somchai cautions that the short-term gains from increased tourism and revenue could be overshadowed by potential negative impacts, including social issues related to gambling addiction and the possibility of deepening economic inequality.

He emphasizes the need for comprehensive policies that encourage genuine economic growth and development.

Aat expresses a similar viewpoint, cautioning that it would be a mistake for the country to place high hopes on the legalization of gambling as a means to achieve prosperity. “Why don’t we focus on reforming our industrial, service and agricultural sectors?” he says.

He urged the Thai government to observe how Chinese President Xi Jinping has been addressing corruption in mainland China. Aat highlighted that Xi has encouraged the Macao administration to seek alternative sources of income rather than relying heavily on revenue from casino operations.

Macau, the world's biggest gambling hub, is the only Chinese territory where gambling is legal. Tourists from mainland China flock to the city to visit its casinos. Gaming revenue last year reached 226.8 billion patacas (around US$28.35 billion), up 23.9% from 2023, according to the Gaming Inspection and Coordination Bureau Macao SAR.

The gaming tax accounts for about 80% of the local government’s tax revenue.

The city has also been known as a hub for money laundering. Since Xi came to power in 2012, he has cracked down on corruption, a policy that has reduced the amount of money flowing through Macau.

In 2012, the city’s gambling revenue at 304.1 billion patacas (US$38 billion) was much higher than they are today.

“If Thailand legalizes casinos, the country could become a destination for money laundering,” Aat warns

Other local critics have noted that during the previous general election campaign, no political party had proposed the legalization of gambling. This absence of support suggests that the government does not have a clear mandate to pursue this initiative.

What’s next?

Opposition to the proposed legalization of casinos is growing. Many local academics and civil groups are uncertain whether opening casinos would lead to greater transparency in an industry often plagued by corruption among state officials and weak law enforcement.

This concern is amplified by Thailand's reputation as a transit hub for scam call centers operating in neighboring countries.

Casinos are already legal in neighboring countries such as Cambodia, Laos and Myanmar, where reports of criminal activities are common.

The international community has also expressed concerns regarding criminal activities associated with casino operations in Southeast Asia.

In January, the United Nations Office on Drugs and Crime (UNODC) released a report titled “Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat”.

The report highlights that many casinos and associated businesses have relocated to autonomous areas and special economic zones, becoming safe havens for criminal networks.

The spread of the COVID-19 pandemic led to a proliferation of online casinos and cyber fraud in Southeast Asia, particularly in the Mekong region.

The UNODC warns that organized crime groups are increasingly sophisticated, utilizing data mining, blockchain technology, and generative artificial intelligence to enhance their operations.

The growth of globalized crime networks in the Mekong has expanded criminal revenue streams, leading to a transformation in regional underground banking systems capable of laundering large volumes of both fiat and cryptocurrencies.

While casinos and junkets have long been vehicles for money laundering, the rise of online gambling platforms and unregulated cryptocurrency exchanges has accelerated the anonymous movement of funds.

This development has fueled the broader illicit economy in Southeast Asia, attracting new criminal networks and innovative service providers, according to the report.