Nepal’s casino industry is recovering from a series of deadly earthquakes and a temporary border blockade with India last year, with international casino operators increasingly eyeing the market as a way to tap potential from neighboring India.
Visitor numbers to the Himalayan nation by air jumped 12.77 percent in the first half of this year to 313,512, compared with about 277,992 visitors in the same period last year. In the first half of 2014, tourist arrivals had reached 412,461.
However, those numbers don’t reflect visitors from neighboring India, which is seen as key to the growth of Nepal’s casinos. This is because Indian nationals do not need to show a passport to enter Nepal, and are able to move across the border freely.
Nepal was once home to as many as 10 casinos, however operators failed to keep up with tax payments and so change was needed. Keen to attract international operators and foreign investment into the tourism sector, which includes casinos, Nepal introduced a new regulatory regime in July 2013, called the “Casino Rules 2070”. After a grace period of 12 months, all seven casinos that failed to comply with the rules were closed down and the incumbent operators were required to file for new licenses.
Today, Casino Mahjong, housed in Hotel Soaltee Crown Plaza, the oldest five-star hotel of Nepal, The Millionaire’s Club & Casino at Hotel Shangri-La, and Casino Pride in Hyatt Regency Hotel have all received licenses under Nepal’s upgraded gaming regulations.
Mahjong is operated by India’s Mahjong Entertainment, The Millionaire’s Club & Casino by Hong Kong-based and Australia-listed Silver Heritage Group and Casino Pride by Goa-based Goa Coastal Resorts and Recreational. Silver Heritage has also announced a major development 12km from the Indian border in Bhairahawa, where it is building South Asia’s first integrated resort, Tiger Palace Resort which will house 52 tables and 200 EGMs, as well as a five-star hotel, conference centre, retail and entertainment facilities.
Three other casinos, including the Casino Royale at the Yak and Yeti Hotel, have been re-opened after securing an interim stay order from Nepal’s Supreme Court. The casino’s at Hotel Malla and at Radisson Hotel re-opened temporarily on August 18 and August 25 respectively. All of these are run by local operators, none of whom have yet been issued a license under the new regulations.
Kumar Shrestha, a veteran local casino manager, who ran casinos under the old regime and who has recently been appointed the operations manager of Casino Venus, said re-opening casinos based on a stay order was only a temporary solution. “We hope the government would amend the regulations under which we will be able to operate casinos,” he told AGB.
Shrestha said Nepal was well-placed to cater to the affluent Indian gamblers from northern India - New Delhi, Punjab and Haryana. The casinos of Nepal are easier to access than Goa and Sikkim, the only places where gambling is currently available in India.
“If you live in New Delhi and the surrounding region and want to gamble over the weekend, it would make more sense for you to take an hour-long flight to Nepal than to fly for more than three hours to Goa,” he said, adding there are no direct flights to Sikkim, which is only reachable after a long drive from the nearest airport in the northeastern Indian state of West Bengal.
A surge in visitors from China, Nepal’s other giant neighbor, also augurs well for the casino industry. Earlier this year the Government waived visa fees entirely for all Chinese nationals in an attempt to drive tourism from the mainland. “We must tap into these two big markets. And, if our government supports us with amendments (to the regulations), this sector will really take off again,” Shrestha said.
Silver Heritage CEO Mike Bolsover said the group welcomed the new casino regulations, which are likely to improve standards across the industry. “We fully support continued regulation of the industry and the steady improvements being made will likely result in higher levels of inbound tourism, a higher quantum of local employment, higher standards of compliance and regulation within the sector and a higher standard of entertainment product for international visitors from India, China and other countries, such as Korea, and in turn higher tax revenues for Nepal."
However, some local operators who ran the casinos under the old regime still feel the new fee structure is too onerous, pointing in particular to a US$300,000 per annum per property “Casino Royalty”, and a US$100,000 per annum Licensee application fee.
“We have been demanding to the government for the revision of some of the provisions. They are related to the amount of paid-up capital, the annual license fee, the fee for applying for renewal of license, keeping the record of CCVT for six months etc,” said Chiranjibi Acharya, a spokesman for Casino Association Nepal. They have been meeting with officials from the government to push for change.
Sudarshan Prasad Dhakal, the director general of Department of Tourism, acknowledged that the industry had suffered a downturn and said the government had been considering operators' demands.
However, insiders say that the government is most likely to stand firm as it notes growing interest from international operators in this near neighbor to India’s vast middle class. Executives from regional Hong Kong-listed casino operators Melco and NagaCorp have been spotted in Kathmandu recently, fueling speculation that this forgotten but 50-year old gaming jurisdiction may have been rediscovered.
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