What King Bhumibol’s passing means for Thailand’s casino industry

What King Bhumibol’s passing means for Thailand’s casino industry

As casino operators venture out of Macau, many are looking at Thailand as one of the best potential markets in Asia. The country has been a recipient of many proposals seeking to bring casinos to Thailand, including Sheldon Adelson’s Las Vegas Sands.

What King Bhumibol’s passing means for Thailand’s casino industryThe strong interest in casino development, however, was met with opposition from Buddhist groups and indecision from tourism sponsors, not to mention the country’s continued political rift.

The death of King Bhumibol Adulyadej on Thursday—after a 70-year reign—is expected to change the political climate in Thailand, which could also extend to the gaming sector.

Union Gaming analyst Grant Govertsen forecast at least a month-long period “very soft Thai-originated gaming volumes at several border casinos run by publicly traded operators,” including Donaco International, Entertainment Gaming Asia, Macau Legend and Silver Heritage.

“Over the long-term, a newly elected government under the new monarch, or perhaps a strengthened military government, could green light the holy grail of gaming expansion in Southeast Asia,” Govertsen said in a note.

He doesn’t foresee any discussion on gaming expansion to start until 2018, noting that there is a possibility of “a fairly long transition period (potentially more than a year) for the monarchy” so he expects “the current military rule to remain in place until late 2017 at the earliest before new elections are held.”

A poll conducted early this year showed many Thailand residents, particularly middle-income earners, support the legalization of casinos. Rangsit University College of Social Innovation Dean Sungsidh Piriyarangsan was quoted by local media saying legal casinos would boost Thailand’s international tourism by 40–50 percent. Quite apart from the tourism boost, Sungsidh also believes the government stands to collect an additional THB100 billion (USD2.8 billion) per year simply by licensing and taxing casinos.

Thailand is one of the only three ASEAN countries—Indonesia and Brunei are the other two—without legal casinos. Cambodia and Laos are already hosts to casinos on their borders whose businesses rely on patrons coming from Thailand. Govertsen believes the border casinos may experience “weak trends” during the 30-day period of restriction for entertainment activities following the king’s death.

“While we expect border casinos to experience weak trends over the coming weeks we do not anticipate major gaming hubs like Macau and Singapore to have an impact given that Thai visitation, particularly to Macau, is insignificant,” Govertsen said. “We believe that the average Thai casino customer to Macau and Singapore has a lower theoretical value and therefore the percentage of GGR attributable to Thai players is much lower than their percentage of visitation.”