Local operators criticise new bill for locals ban, fees

Nepal has proposed new regulations to tighten oversight of its casinos, just five years after passing legislation to govern the sector, though some local operators have expressed disappointment at a ban on locals and high fees.

The latest bill seeks stricter action against casino operators that default on taxes and flee the country. The proposed Federal Tourism Act 2018 includes regulation on mountaineering, casinos, trekking and adventure sports.

It also envisages a powerful 19-member National Tourism Council chaired by the prime minister.

Aside from the authority to confiscate property of casino operators who default on taxes, the bill also allows authorities to seize assets, passports, and bank accounts in Nepal and abroad.

The bill, which is largely drawn from the Casino Regulation of 2013, proposes licenses for luxury resorts (apart from five-star hotels), but also imposes strict rules against gambling by locals.

The proposed bill also makes hotels liable for non-payment of taxes and other fees. “Failure to pay the bills will result in cutting off of utility services,” the provision says.

The government is expected to table the bill in the winter session of the parliament, which began on December 26, 2018.

While foreign investors have largely welcomed the new bill, local operators have sought several amendments.

Chiranjibi Acharya, a spokesman for the Casino Operators Association Nepal (CAN), said the new bill retained many of the unpopular provisions from the Casino Regulations of 2013.

“Rather than making changes to many provisions of the regulation, which we had demanded earlier, the current proposal continues with the old ones,” he said.

On December 5, 2018, CAN submitted its recommendations to the Ministry of Tourism. The local operators urged the government not to increase fees, such as raising the license fee from 20 million Nepali rupees to 30 million for casinos and 10 million Nepali rupees to 20 million for mini casinos.

“We have requested the government to provide us 50 percent discount in these fees,” said Acharya.

The proposed bill requires mini-casinos to be housed in four-star hotels. Acharya said local operators were lobbying for the government to allow Nepalese to gamble since “they were travelling to countries like India, Singapore, Sri Lanka and Cyprus for the purpose.” The CAN has also opposed the rule that says mini casinos should be 5 kilometres from the international border. “The whole idea of border casino is to attract customers from across the border. If the rule was included for security reasons, we haven’t seen any problem so far,” he said.  

Provisions such as betting limits and the declaration of the number of chips and their value should be removed from the proposed bill, he added. The bill also imposes a windfall tax, though CAN is calling for the tax only to be imposed on winnings above 1 million Nepali rupees ($8,900).

Though the Ministry of Tourism has invited input from stakeholders, it isn’t likely to make amendments on fees and other revenues, said Suryabamsha Sharma Kandel, an under-secretary at the ministry.

“We have a history of casino operators not paying royalties,” he said referring to 1 billion ($8.9 million) in royalties owed to the government before it temporarily shut down all casinos in April 2014.

Kandel said the ministry was willing to allow mini casinos to run if the hotel premises are in the process of upgrading to four-star level.

“But decisions such as removing the 5-kilometer restriction should come from the political level,” he said.

Mike Bolsover, CEO of Silver Heritage Group, which runs Millionaire’s Club and Casino at the Shangri-La Hotel in Kathmandu and Tiger Palace Resort in Bairahawa, near the Indian border, said Nepal should engage an internationally experienced group to assist in drafting the bill. “The bill should reflect Nepal’s commitment to an international standard of rules and regulations and laws around casinos and integrated resorts,” he said.

“It should promote sustainable growth and protect investors,” he said, adding that Nepal “required an independent enforcement agency or regulator.

He welcomed the proposal to take strict action against defaulters, but added that a Supreme Court stay order, which has allowed some casinos to run despite not having paid fees, should be rescinded. “Nepal should have one set of laws and regulations for all [operators],” he said.

Other industry insiders such as Nischal Chapagain, operations manager of Bally’s Casino at Hotel Malla, said if managed well, casinos can attract new players. “If there’s a holiday of 3-4 days in India, we receive a lot of gamblers from the country,” he said, adding in recent months there has also been a spike in Chinese players from the province of Guangzhou.

Chapagain also pushed for allowing Nepalese to gamble, arguing that their money was being spent in foreign countries.

The number of casinos in Nepal has reached seven after Pride Group, which operates Casino Pride at the Hotel Hyatt Regency launched Casino Palace at the five-star Hotel Del’ Annapurna in March last year. Others include Casino Mahjong at Hotel Soaltee, Casino Royale at Yak and Yeti Hotel and Casino Rad at Hotel Radisson. These last two operate on the basis of an interim order from the Supreme Court.

Two more casinos are are in the works.

Deltin Group, owned by Delta Corp Ltd, which runs India’s largest offshore casinos, is launching its first casino in Nepal at the five-star Marriott Hotel in Kathmandu, which will open its doors in February, 2019. While India’s Golden Globe Hotels, which runs Big Daddy Casino in Goa, is planning to open a casino in eastern Nepal near the Indian border. A five-star hotel that is under-construction in Char Ali of Jhapa district will reportedly house the casino.