Casino Industry Business in Nepal

With increasing number of international guests and travellers showing an interest in casinos and gambling, the Casino Industry business in Nepal is getting better. There is huge trend of indulging oneself in casinos and enjoying the numerous games that it offers in the country. However, GoN only allow international guests and citizens to enter inside Nepal’s casinos. The government has put a ban on Nepalese citizens to enter inside a casino.

In 1968, Casino Nepal opens up as a first casino in the country. Tuttle is an American who started casino industry business in Nepal in 1968. Nepal is the only countries in South Asia to award licenses for casino operation. For this reason, it’s a popular tourist destination for South Asian gamblers.

In September 2005, the Tourism Industry Division, under the Ministry of Culture started monitoring casinos so as to ensure that they were following the terms that were agreed upon when licenses were being awarded. In 2004, Nepal Recreation Centers, the company which runs all Nepalese casinos, made history by becoming the first land-based casino which also offer online playing services.

Casino Business in Nepal and management

There are eight most popular casinos in Nepal located inside some of the most popular four to five-star hotels in the capital. These casinos have let the guests enjoy their time by indulging in various games and also have helped the hotels in economic aspects. These establishments offer gaming such as Blackjack and roulette, video poker, slot machines and poker. There are numerous important places listed in world heritage, beautiful temples, monasteries and exceptional mountainous landscapes, that makes Nepal  an ideal destination for getting away.

Casino in Nepal are currently governed by Casino regulatory act 2013. As per the regulation, casino operators have to pay a fee of Rs. 20 million to obtain a casino operating license. They are required to renew the license annually by paying 50 percent of the operating license fee. Furthermore, casino operators must pay the government an annual royalty of Rs. 40 million as set by the Financial Act 2017-18.

Few Casinos in Nepal

1. Casino Mahjong and hotel Soaltee Crown Plaza.
2. Casino Royale Yak and Yeti
3. Kathmandu Casino Pride and Hyatt Regency Hotel
4. Millionaire Club and Casino at Shangrila Kathmandu
5. Tiger Palace Resort and Casino

Contribution of Casino Industry business in Nepal

Since the establishment of casino in Nepalese market to international tourist, it has given rise to employment opportunities in local market. With the increase in the Casino in Nepal it has led to greater tax revenue to state and local government. It also foster local economic developments and bring more beneficial opportunities to commercial activities.

As it attracts lot of international tourist, several studies have also indicated that casino businesses produce positive local environmental outcomes, including the protection of natural environments and ecological resources. It also helps in the conservation of historical buildings and cultural heritage, improvement of public transportation, upgrades in electrical facilities, higher medical standards, revitalization of city landscapes, and increases in recreational playgrounds. As a result, development of Infrastructure in nation building campaign.

Impacts of Casino in Nepalese Market

Along with the increased benefits, it has also become partly responsible for increment in the prices of goods, rise in crime rates and expansion of various pollutants. Furthermore, it has greater social impacts like social deviations, domestic violence, divorce, bankruptcy, drug and alcohol abuse, risky or illicit sexual behavior (especially prostitution).

Even though the Government of Nepal has set out the boundaries for Nepalese citizen saying that Gambling is illegal (especially in Casino), Nepalese citizen still make it to Casino to gamble which have become the rising issue in the market. This has resulted in issues concerning child neglect and family problems have become more challenging. It is found that there were growing demands for child protection, marriage counseling, and other social service programs in these gaming communities. Another concerning issue is the increase in the number of pathological gamblers regarding the development of casino gambling.

Opportunities of Casino Industry Business in Nepal

Nepal is pursuing a liberal foreign investment policy and it is also striving to create an investment- friendly environment so as to attract FDIs into the country. Our tax slabs one of the lowest and we are fairly at good position in ease of doing business index. Profitable areas of investment include hydropower, industrial manufacturing, services, tourism, construction, agriculture, minerals and energy. Nepal encourages foreign investment for both joint venture operations with Nepalese investors and also as 100 per cent foreign-owned enterprises.

A large number of revenues generated from tourism industry. According to a report published by the World Travel and Tourism Council(WTTC), Nepal’s Travel & Tourism sector is a major job provider that accounts for 2.9% of the total employment in the country as of 2016. The travel trade sector (hotels, travel agents, transportation services) generated 427,000 direct jobs and generated of NPR 48.6 billion last year.

The direct contribution of Travel and Tourism to GDP was NPR 85.2bn (USD0.8bn), 3.6% of total GDP in 2016 and is forecasted to rise by 4.3% pa, from 2017-2027, to NPR 138.9bn (USD1.3bn), which is 4.0% of total GDP in 2027. In 2016 Travel and Tourism directly supported 427,000 jobs (2.9% of total employment). This is expected to rise by 2.9% pa to 604,000 jobs (3.2% of total employment) by 2027. Travel & Tourism investment as in 2016 was NPR 16.5bn, 3.0% of total investment (USD0.2bn). It should rise by 5.5% pa over the next ten years to NPR 28.3bn (USD0.3bn) in 2027, 3.6% of total.

Tourists and Foreigners

A large number of tourist visits Nepal every year, to be exact according to Nepal’s Ministry of Culture, Tourism & Civil Aviation, ‘Nepal Tourism Statistics 2016 total of 735002 tourist visited Nepal for different purpose out of which total of 489,451 travelled to Nepal for holiday and pleasure. Out of total 753002 tourist travelled in Nepal around 104005 Indian Tourist visited Nepal. Furthermore, according to hotel association Nepal (HAN) it is predicted that the number of tourists shall increase each year and by the year 2020 it is forecasted that number of tourists visiting Nepal will be to 2 million. From the study of tourist inflow, the majority of the tourist coming to Nepal are Indian for various purposes.

As the Casino focuses on tourist for its business, Indian in tourists are the major target for the casinos in Nepal. Therefore, we can conclude that in upcoming years, casino industry business in Nepal can reap its full benefits from its guests. Since we have open border with India it acts as great opportunity for Indian citizens. It creates huge revenue for the nation so its beneficial for the casino operator as well as casino operator.

In addition to direct economic benefits, the establishment of casinos could also foster opportunities associated with recreational, leisure, and entertainment activities within these cities. Many casinos offer other forms of entertainment, like restaurants, bars, pubs, and retail outlets. However, these service industries only recognize as auxiliary industries in comparison to casino gambling.

Current issues of casino industry business in Nepal

According to a report from The Kathmandu Post newspaper, Nepalese officials had announced in June that they were planning to submit the draft Casino Bill 2018 to cabinet amid hopes that the small nation’s close proximity to China and India could see it become the planet’s next gambling hotspot, encouraging foreign investment into the sector, and bring its existing casinos in line, as per local media reports. It would have had regulated casinos in a more managed way and protected the investment of foreign investors.

The new Casino Act would have had superseded the Casino Regulation 2013, which currently govern casinos in the country and also the Supreme Court’s orders. However, the government’s decision to attach casino-related laws in the Tourism Act instead of passing a separate Casino Act is disappointing to casino operators. Nepal may lose out benefits of authorized and responsible gaming. Specially, it expects to attract huge foreign investment and tourist arrivals.

The Kathmandu Post reported that any new gaming legislation inserted into the Tourism Act 2018 may. It prove to be too weak to address potential risks and attract foreign investment. The Casino Regulation Act 2013 governs the Nepalese casino industry in Nepal. But, this was reportedly hijacked by a recent Supreme Court ruling that seemingly allows some casinos to operate without paying the appropriate level of tax. The newspaper detailed that this has led to the impoverished nation currently being owed around $11.33 million in aggregate duties from several casinos including Kathmandu’s Casino Royale and Casino Rad. The most complicated matter for the department is that it cannot collect taxes and royalties as it has scrapped their licenses. In a legal sense, the casinos are operating unlawfully but we have to honor the court’s ruling.

Foreign Development Investment (FDI) and Benefits to Casino Industry

Nepal has been striving to create an investment- friendly environment to attract FDIs into the country. It has liberal foreign investment. Ease of doing business is at 105 th position. Tourism is one of the profitable areas of Nepal. Nepal encourages foreign investment both as joint venture operations with Nepalese investors and also as 100 per cent foreign-owned enterprises. As a result of that The Deltin Group, a subsidiary of India’s largest gaming company, Delta Corp Ltd (DELTACORP), is reportedly planning to operate a casino at one of Marriott’s flagship hotels currently being built in Naxal, Kathmandu.

Next example could be Silver Heritage which is an experienced regional gaming operator. It operates and manages casinos in Nepal (under its own licence) and in Vietnam (in partnership with a licence holder). Now operating across Asia for more than a decade, Silver Heritage brings best-in-class gaming operations for the emerging gaming markets that are witnessing significant growth in gaming due to the rising income levels and liberalization of gaming regulations and due to the rapid growth of outbound Chinese and Indian tourism. Silver Heritage has opened up South Asia’s first Integrated Resort, Tiger Palace Resort Bhairahawa, in Nepal. It locates close to the border with India’s most populous state, Uttar Pradesh. Construction is on its way for another one in Jhapa.

Foreign Investment Benefits

We could say that bringing foreign investment as casino in the country will help in the following ways.

• It serves as a principal complement to domestic investment and capacity building for growth development of the LDCs
• It brings package of resources-capital, technology, skills, management know-how and marketing capabilities-together with production activities to Nepal’s economy
• FDI as a mechanism could facilitate and implement Sustainable Development Goals (SDGs).
• It support consumer welfare, create employment opportunities, increase labour, and environmental standards, contribute to improved living standards and poverty alleviation. For example Silver Heritage is giving 20% plot to local partner in the casino opening up in Jhapa.

Conclusion

A proper Casino Regulatory Act implementation will help casino industry in Nepal and also help developing countries like Nepal. Let’s take example of Macau which is the gambling capital of the world. Its economy is largely dependent on gambling and tourism with the largest gambling revenue since 2006. It has a very high Human Development Index and fourth-highest life expectancy in the world. Nepal is in 39 position among the world’s richest regions. It’s GDP per capita by purchasing power parity is higher. In 2015, Macau ranked the top Fastest Growing Metropolitan Areas in the world By Brookings Institution. There are few major reasons why Macau concentrates on casino development. They are :

1. Development of tourism
2. To create job opportunities
3. Utilize its advantages in regard to Macau’s close proximity to mainland China
4. To leverage its status as the only center for legal casino gambling in China.

Likewise in Singapore, Lee was compelled to re-examine his early anti –gambling attitude. Singapore couldn’t afford to lose its national competitiveness. The total annual revenues of casino gambling were USD 2.8 billion in 2010 and USD 4.1 billion in 2013. This was a result of opening two integrated resort casinos.

As mentioned earlier, most of the tourist visiting Nepal are Indians. The casinos in Nepal target Indian citizens. There is huge potential of reaping the benefits from them by the casinos. Another crucial factor is we have open border with India that facilitates in easy entrance of Indian gamblers. By 2020 the number of tourist visiting Nepal will rise to 20 million which definitely adds to casinos industry.