Casinos in Thailand: Bangkok IRs could generate US$2.5bn to US$5bn a year, JP Morgan says

Analysts believe legal casinos could add 0.3 per cent to 1 per cent to Thailand’s gross domestic product.

Thailand.- A new report from JP Morgan has predicted that integrated resorts (IR) in Bangkok could collect between US$1.5 bn and US$5bn in revenue annually and between US$0.4bn to US$1.5bn in earnings before interest, taxation and depreciation (EBITDA) with an internal rate of return range of 12 per cent to 29 per cent.

Analysts also said legal casinos could add from 0.3 per cent to 1 per cent to the country’s gross domestic product (GDP) and boost tax revenue by 0.4 per cent to 1.2 per cent.

In May, deputy finance minister Julapun Amornvivat suggested that the casino component would be no more than around 5 per cent of the project’s total area. Despite this, JP Morgan said casinos could contribute over 90 per cent of the total IRs revenue and estimated that over 50 per cent of this revenue will come from foreign tourists.     

JP Morgan’s report drew a parallel with the gambling industry in Singapore but pointed out that Thai residents typically earn less than people in Singapore, which may lead to lower local spending. Analysts stressed that if Thai authorities decide to increase the entry fee for locals, this could also affect the number of local visitors to casinos.

Earlier this week, Amornvivat called all relevant state agencies for discussions regarding the process for tax collection, given the constraints outlined in the State Fiscal and Financial Disciplines Act, which the government must comply with.

The act stipulates that tax collection falls under the purview of the Customs, Revenues, and Excise departments within the Finance Ministry and cannot be delegated to a separate committee, as previously suggested by the House. Amornvivat said the debate could be finalised by mid-October.  

The draft bill stipulates that complexes should be located in designated areas and operated by companies registered in Thailand with a minimum paid-up capital of THB10bn (US$283m). A policy panel led by the prime minister and a regulatory agency would oversee the industry.

MGM Resorts International and Galaxy Entertainment Group have already shown interest in the possibility of casino resorts in the country. Investment group CLSA said Las Vegas Sands and Wynn Resorts are also interested. The Royal Turf Club of Thailand (RTCT) is also planning to invest THB200bn (US$5.88bn) in an IR with a casino. Five locations are considered potential hosts: two in Bangkok, and one each in the Eastern Economic Corridor, Chiang Mai, and Phuket.