There are many unanswered questions for any foreign investors interested in the possibility of running casino resorts in Thailand, and they might not immediately be answered even if an enabling law is passed this year.
That is according to Vitaly Umansky (pictured), senior analyst at Seaport Research Partners, in comments to GGRAsia.
He observed that from his understanding, the Thai government “is having right now very limited advisory [input] coming in from third-party expertise,” regarding its plan for entertainment complexes, each to have casino.
Thailand’s cabinet approved in principle recently the Entertainment Complex Bill for casino liberalisation.
Chulapong Yukate, an MP for Thai opposition grouping the People’s Party, had mentioned to GGRAsia that details for the industry would be outlined via decree, subsequent to the framework Entertainment Complex Bill, which in its most recent publicly-aired summary has eight chapters.
Mr Umansky observed to GGRAsia: “The bill that’s out there right now is immensely short. It deals with policy from the perspective of setting up governing bodies. That’s a large part of it.”
Mr Umansky also addressed the topic of whether as an emerging market with a recent history of political instability, investment capital for casino resorts could be at risk. In 2006 and 2014 Thailand saw civilian governments ejected and replaced by army administrations. While civilian government is again active, the country’s Constitutional Court also has power to dismiss a sitting prime minister, and used it in August against Srettha Thavisin.
The Seaport Research analyst observed: “When we start talking about development costs, we have to be cognisant of what the risk and return is.
“The risk of development in Thailand… is significantly higher than other markets. It’s significantly higher than Singapore was, and significantly higher than Macau was” at the time of initial market liberalisation at the turn of the current century, suggested Mr Umansky.
U.S. firms mindful of treading carefully
In Thailand, where local media has reported there could be five licences on offer, there were “various political interests that are trying to push and pull things,” said Mr Umansky.
Any United States-based or -listed casino operators that might wish to be investors in Thailand, are covered by the U.S. Foreign Corrupt Practices Act (FCPA), meaning they have to be especially mindful of their interactions with businesspeople and politicians in overseas jurisdictions.
“If FCPA violations become a problem in the Thai process, that’s going to knock out” of contention, “most likely all of the American operators,” stated Mr Umansky. “You’ll be left with a much smaller universe” of potential investors, he added.
Thailand’s leaders “need to bring in experts who understand the industry, who understand regulatory frameworks… [people] who can help the government craft all of this,” said the analyst. That could be achieved still “under the guidance” of the local politicians, in a manner that “works for Thailand,” he added.
In terms of any bid process for licences, “an RFP [request for proposal] is not just a sheet of paper,” said Mr Umansky.
“It’s a comprehensive submission based on a request for certain information. First the RFP proposal questionnaire needs to be put together. Who’s putting that together? If you asked any operator right now to put together a proposal, they wouldn’t even know where to start,” he added.
“Where are they [licences] actually going to be, and what is the licensure going to look like? What is the regulatory framework going to look like? Nobody can put in proposals without understanding the regulatory framework,” added the analyst.
He told GGRAsia: “I think there will be gaming in Thailand. I just don’t really know what it’s going to look like.” He added, quoting an estimate for overall capital investment aired in some commentary: “I think this notion that we’re going to have [in aggregate] US$32 billion of investment, is completely unrealistic.”
