Casinos are booming in South-East Asia

Lush jungles, pristine beaches, cheap booze and, as of late, readily available marijuana: Thailand seemingly has something for every kind of tourist. But punters in search of a flutter would disagree. Apart from a government lottery and state-controlled horse-racing, gambling is illegal. So for those who enjoy betting, they must cross Thailand’s borders. In Cambodian and Laotian towns on the other side, casinos cater to their needs.

However, such arduous journeys may soon no longer be needed. Riding on a wave of liberalisation—cannabis was decriminalised in 2022 and same-sex marriages were legalised this month—Thailand is now close to permitting casinos. Earlier this year, the Thai parliament backed a study on the feasibility of casino resorts. That paved the way to legislation, which could come in a matter of weeks, according to the deputy finance minister.

Thailand’s proposal is the latest sign of a gambling boom sweeping the region. In the Philippines, where gambling is legal, officials want to build at least one more resort every other year, on top of the 43 currently in the country. Singapore’s government has extended the licences of its two casino resorts, which have been running since 2010. Muslim-majority Malaysia, where gambling is banned, is mulling a second casino for foreigners, along the lines of the one operating in Genting Highlands, a popular tourist spot. In Cambodia the number of licensed casinos increased from 101 in 2021 to 174 in 2023. Throw in the casinos operating in Myanmar, Laos and Vietnam, and there are now around 350 in the region.

Economic growth in South-East Asia has given people more disposable income to indulge in games. But more significant is the rise of China, a country obsessed with gambling. For years, the Chinese could get their fix only in Macau. That special administrative region, home to more than 40 casinos, is the sole part of China where casinos are allowed. As Chinese wealth has increased, so has the ability to travel.

Many punters have also been forced to travel farther abroad. Xi Jinping, China’s leader, is cracking down on gambling, which is a big source of capital flight. Macau’s casinos have been asked to tighten money-laundering controls. The clampdown was extended to “junket” agencies, which are used to woo high-rollers by helping them bypass capital controls. Gaming revenues at Macau’s casinos this year are expected to be 17% below those of 2019, the pre-pandemic baseline, according to data from H2 Gambling Capital, a consulting firm, though they remain high (see chart).

This makes the business case for casinos in South-East Asia compelling. Singapore’s two integrated resorts raked in $4bn in 2023; in the Philippines, the equivalent figure was almost identical. The effects of casinos, however, go far beyond just gaming revenues. They are sources of employment and tourist magnets. In Singapore, employment, construction and tourism all benefited after the casinos opened up, according to Samuel Yin Shao Yang, an analyst at Maybank, a Malaysian bank.

Thailand could hit an economic jackpot. Some 12m tourists have visited so far this year, of whom nearly 20% are from China. According to the study presented to the Thai parliament, the introduction of casinos would raise average tourist spending by 52%. The additional expenditure could boost GDP growth by one percentage point. A real-estate industry body estimated that each new casino complex could create at least 30,000 jobs.

The other big boost will be to government finances. Taxes on casino revenues accounted for roughly 2% of the Philippines’ government’s total receipts in 2023. Half of that amount went directly to health care. In Singapore, taxes on betting, which include casinos and other forms of gambling, contributed 2% of government revenue. Such supplemental funds would be welcome in Thailand. The country’s social-spending bill is projected to rise sharply as its population ages rapidly.

Yet many Thais do not share their government’s enthusiasm for casinos. An opinion poll in 2021 found that nearly half of Thais opposed legalising gambling amid concerns about crime and morality. Earlier this year, the UN’s regional drugs agency blamed casinos for the rise in organised crime across South-East Asia.

Thai officials point to Singapore as a model. The city-state restricts entry to casinos for its citizens through a hefty fee, and invests in rehabilitation and education efforts. Between 2005 and 2020, the share of the population diagnosed with a gambling problem fell from 4% to 1.2%.

Ultimately, however, the success of casinos will depend on China. For all the growth in South-East Asia, gambling revenues in the region were still less than half the value of those in Macau. Chinese punters remain the whales, but Mr Xi is trying to cut them down in size. Earlier this year Hun Manet, Cambodia’s leader, announced that he would stop issuing licences for new casinos, citing “difficulties” and the importance of creating jobs through other means. Industry insiders believe Cambodia was influenced by China.

China is also wagging a finger at its citizens. In March its embassy in Singapore “solemnly reminded” them that cross-border gambling was illegal. Judging by the crowds at Singapore’s Marina Bay Sands, Chinese citizens are yet to take heed. As long as they refuse to do so, South-East Asia will rake in the winnings. ■