Nepal’s casino sector appears finally to be poised for expansion, with new properties opening and foreign investors entering the market, drawn by the lure of untapped demand in neighboring India and increased business traffic.
The industry is one of the oldest in Asia, but has been through a transitional period, with new international standard gaming regulations introduced in 2013 and with the country hit by an earthquake and temporary border issues in 2015.
However, the picture is brightening. Nepal recorded a 31 percent gain in tourist arrivals for 2016 to 729,550, although these numbers don’t include those crossing by land from India. The economy has also rebounded, recording growth of 7.2 percent in the fiscal year ending mid-July, its highest rate in more than 20 years, though momentum is expected to slow slightly this year.
The foreign investment pipeline into the country looks healthy, bringing in a steady flow of business travelers, which is also likely to benefit the casino industry. During the Nepal Investment Summit in March, foreign investors pledged $13.7 billion in direct investment, with the bulk of this from China.
When it comes to the gaming industry, Australia-listed Silver Heritage Group has led the charge among foreign investors, betting on pent up demand in India. In 2015, it opened the Millionaire’s Club and Casino at Shangri-La Hotel in Kathmandu, one of the first under the new regulatory regime, known as the Casino Rules 2070, and this week won a five-star rating for its hotel in the country’s first integrated resort.
The A$70.3 million Tiger Palace Resort in Bhairahawa held a soft opening for the hotel in September. The resort opened with 100 five-star rooms, which will increase to 400 in later stages. The company has applied for a casino license and will begin operations as soon as the application has been processed. It had originally expected a Nov. 30th opening date.
The operator has signed up with several popular Indian and global online travel agents and launched a mobile app for members and patrons. They have also started promoting the integrated resort on social media including Facebook and Twitter.
“We are the first large-scale integrated resort in South Asia, located in the Terai in the lowlands of southern Nepal and we are excellently situated with great access to two UNESCO World Heritage Sites - Chitwan National Park and Lumbini, the birthplace of Buddha,” Silver Heritage CEO Mike Bolsover said.
“The resort and its location appeals to all of India and in fact to all international travellers, for example our Northern neighbour China, Thailand, and the rest of Asia. Where else can you visit the birthplace of Buddha, go on safari with tigers, elephants and rhinos and see Everest all in one day, let alone on one holiday?”
The group is convinced the growing Indian middle-class population will be a major driver for Nepal’s tourism industry. has already bought land to build another IR along the border in eastern Nepal.
The Indian province of Uttar Pradesh, just across the border, has a population of more than 215 million, and a burgeoning middle class and Indians are able to travel freely to Nepal across a porous border. India is forecast to have the world’s largest middle class consumption of about $12.8 trillion annually by 2030, compared with $10 trillion in China.
Sri Lanka’s largest casino operator, Bally’s Casino Colombo, is also entering the market with the launch of the Casino Venus at Hotel Malla in Kathmandu set for later this month. While the newest entrant will be Deltin Group, which is owned by Delta Corp Ltd, operator of India’s largest offshore casinos. On Oct. 25, the group released a statement saying it will build a world-class casino at the five-star Marriott Hotel in Naxal, Kathmandu.
Everest Hospitality and Hotel Private Limited, which owns the four-star Fairfield by Marriott in the tourist district of Thamel, signed an agreement to build the luxury casino. “We are very exhilarated to bring a luxury hotel together with a world class casino entertainment to Nepal and eager and excited to welcome high profile international tourists and casino clientele,” Gaurav Agarwal, the company’s managing director said in the press statement. The hotel is scheduled to launch in June 2018.
With the completion of these three new casinos, the number of casino currently operating in Nepal will reach 8. Prior to the introduction of Casino Regulations in July, 2013, there were 8 casinos in the capital Kathmandu and two in resort town of Pokhara in western Nepal. The new rules stipulate that casinos should have paid-up capital of at least 250 million Nepali rupees ($2.41 million), with the minimum set at 150 million Nepali rupees for mini-casinos. The royalty alone is set at 30 million Nepali rupees per casino a year for casinos and 7.5 million rupees for mini-casinos, payable by the end of each fiscal year. An annual fee for renewal of license, to be paid to the tourism ministry, is set at 500,000 Nepali rupees for both casinos and mini-casinos.
The new regulations were criticized by local casino operators, who said it forced them to shut down their business as they were unable to comply with the capital requirements.
With the economy recovering, the next piece in the puzzle for Nepal will be improving political stability. Nepal is holding provincial and parliamentary elections in late November and early December, capping a series of polls that are crucial in institutionalizing democracy in the country. Kumar Shrestha, a former operations manager at Casino Anna and now a casino consultant, said political stability, which is expected to follow the elections, will be key to the growth of casino industry in Nepal.
“Once we have a stable government in the centre and the new local governments are in place across the new federal states, we can expect the entertainment and recreation sectors to flourish,” he told AGB.
Shrestha said the announcement of new casinos by international companies meant the sector will enjoy international branding and credibility. “These international casino operators have their own clientele and well established branding and marketing. Over the years, they have built trust among gamblers,” he said adding that such market leaders could divert their clients to casinos in Nepal.
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