The speed with which Thailand is progressing its integrated resort ambitions could see casino legislation passed by early 2025, an industry expert has claimed. But whether the quality of that regulation is enough to attract significant international investment remains to be seen.
Speaking on a panel at the G2E Asia conference in Macau on Tuesday, Daniel Cheng revealed the Thai government is wasting no time in pushing forward with legalized casinos, even as the Ministry of Finance continues to work on formalizing the recommendations contained within a House committee report on the matter.
“We are hearing that the legislation could happen as soon as early next year because as far as the existing government is concerned – and it’s something I don’t really agree with – they would like to see the fruits of this legislation and the opening of the first Thai resorts while they are still in government,” Cheng explained.
Yet there remain doubts over whether Thailand can fully realize its IR dreams, with Seaport Research Partners senior analyst Vitaly Umansky doubling down on comments made in a recent note in which he suggested the Thai market would not be ready initially for US regulated operators such as Sands, MGM and Wynn to be involved.
“Many governments look at the development of the casino industry and they look at Macau and they look at Singapore and their first attempt is to replicate one of those two industries,” Umansky said during Tuesday’s panel session.
“I think the difficulty of approaching legalization and development in that fashion is that both Macau and Singapore are entirely unique geographic and political constructs that are very difficult to replicate in most other countries around Asia and the rest of the world.
“So, whether or not Thailand moves forward on casino legalization, I think the more interesting question is going to be what does that mean? What does this industry eventually look like? And I am very skeptical at this stage that Thailand is going to have the wherewithal to actually create an industry of scale, meaning the ability to bring in foreign investment of large enough scale where they actually wind up building multi-billion dollar properties and have a well regulated environment.
“The biggest problem is going to be on the regulatory front and even more importantly it’s going to be on the political risk front, because to go to a public company, an international casino operator and developer, and ask them to invest US$4 billion or US$5 billion in a country that is politically at risk of having bad things happen – government changes, political unrest – I think it’s a very big ask.”
Umansky described the current investment figures being thrown around for Thailand as “very unrealistic numbers”, adding the country may be better served following Macau’s lead and starting smaller.
It is now almost just a little over 20 years since the opening of Sands Macao – a US$265 million experiment by Las Vegas Sands founder Sheldon Adelson – proved Macau’s potential and paved the way for the development of the multi-billion-dollar resorts that now dot the Cotai Strip.
“What is the political risk situation in a country like Thailand, where cannabis is legalized one year and has now been criminalized the next?” Umansky asked.
“The government flips, things change. That is not a stable political environment where an operator will be willing to commit billions of dollars of investment.
“If the government was to change its views and say ‘Look, we understand this is difficult’, then they can start small and build a Sands Macao, see how it goes, start utilizing those cash flows to reinvest, then start to build a proper market over time.
“But to just mandate multi-billion-dollar developments without a regulatory framework that we know can work, I think that will be a near impossibility.”
