The Giant Awakens

by Andrew Klebanow


Global Gaming Business Magazine September 2022

With citizens who are known to be some of Asia’s most prolific gamblers, Thailand has emerged as Asia’s next gaming opportunity


In June 2022, a committee from the Thai House of Representatives announced that it had developed a plan to allow up to five casino resorts across a number of provinces with the primary goals of creating jobs, attracting foreign visitors, and generating additional tax revenues. How these future integrated resorts will fit into the East Asian gaming puzzle remains to be seen, but it is apparent that, if done right, Thailand’s casino industry could be a formidable competitor to those countries that currently serve Thai gamblers.


Thailand is a very attractive market. With a population of over 70 million, a well-developed transportation infrastructure, an educated and growing middle class, a very wealthy upper class, and a vibrant tourism industry, the kingdom has the potential to support a gaming industry. The question is, can these new casinos effectively compete with well-established competitors?


Proposed Locations

The committee exploring casino development recommended a total of five casinos in different regions of the country. In addition to one casino in Greater Bangkok, the committee proposed that one casino resort be developed in the north, either in Chiang Rai or Chiang Mai; Ubon Ratchathani, Udon Thani or Khon Kaen in the northeast; Phuket, Phang Nga or Krabi in the south; and Pattaya City in the east. Each location is unique, as are the markets that they will serve.


Bangkok

Bangkok is the kingdom’s capital. It is an expansive metropolitan area, spanning over 600 square miles with over 14 million residents residing in the metropolitan region. It is served by two international airports that together handled over 100 million passengers a year in 2019.


Bangkok is also one of the world’s great cities. Earning the right to develop an integrated casino resort in the nation’s capital will be a prize sought by the world’s preeminent casino developers. One can expect to see development proposals that will match what the world’s greatest integrated resorts offer today.


While Bangkok will be the most coveted location, other markets have the potential to generate significant returns on investment.


Pattaya

Pattaya City sits on the Gulf of Thailand, approximately 75 miles east of Bangkok. It is the center of the Pattaya-Chonburi Metropolitan Area, a region with a population of over 1 million. A modern highway system connects the metroplex to Bangkok’s Suvarnabhumi Airport. That proximity, along with its expansive seaside resorts, makes Pattaya the second most popular destination in the kingdom, having attracted 30 million visitors annually prior to the pandemic. Dozens of hotels line the city’s two-mile-long beach, and the region boasts over 100,000 lodging keys.


Pattaya is also a popular retirement community for foreigners. Thailand offers a unique visa program for non-nationals over the age of 50. Attracted to the city because of climate, lifestyle and low cost of living, thousands of expatriates now reside in and around Pattaya. The city is also a popular destination for medical tourism, with over a dozen hospitals and medical facilities serving this segment of the tourism population.


A combination of a large local population, massive tourism visitation, a population of expatriate retirees, and close proximity to Bangkok makes for a very compelling development opportunity for a casino resort.


Phuket, Krabi, and Phang Nga

The South region is comprised of three provinces: Phuket, Krabi, and Phang Nga. All are located on a narrow land mass that connects the kingdom to Malaysia, and is bordered by the Gulf of Thailand to the east and the Andaman Sea to the west. They are collectively seaside resort communities that are favored beach destinations for visitors from Europe and Asia.


Phuket province is comprised of a main island along with 32 smaller islands, and has a population of approximately 600,000. The province is adjacent to Krabi, with a population of 475,000, and Phang Nga with 270,000. All have robust tourism economies, with Phuket serving as the center of international tourism. The region’s primary airport is Phuket International Airport, although Krabi is served by its own regional airport. Phuket International is the kingdom’s third busiest airport, recording over 18 million arrivals prior to the pandemic.


The challenge for a casino developer is finding a suitable location that can serve a fairly broad region. Unlike Pattaya, resorts are spread over a wide geographic area. Although the regional road network is adequate, there is a dearth of mass transit. Any developer would have to build a property that attracts foreigners, both staying at the property and at other resorts.


Chiang Rai and Chiang Mai

Chiang Rai and Chiang Mai are Thailand’s two northernmost provinces. Of the two, Chiang Mai is the larger tourist destination. With a population of 1.8 million, the province is served by Chiang Mai International Airport. In 2018, 31 airlines handled over 11 million passengers.


Chiang Rai province is the kingdom’s northernmost province and borders Laos and Myanmar. While it attracts fewer tourists than its sister province, it is a very attractive tourism destination that would benefit from the jobs and tax revenue that an integrated casino resort could provide. A casino in this province would also preclude Thai players from visiting casinos across the border.


Udon Thani, Khon Kaen and Ubon Ratchathani

Udon Thani, Khon Kaen and Ubon Ratchathani are three cities in northeast Thailand in the Isan region, near the border of Laos. Udon Thani is 350 miles north of Bangkok, and the greater area has population of approximately 450,000. A regional airport offers connectivity to a number of domestic destinations including Bangkok. A casino in this city would intercept players going to Laos, while serving a reasonably sized local population.


Khon Kaen province has a population of 1.9 million people while Khon Kaen city has 150,000 residents. Ubon Ratchathani is located near the borders of Cambodia and Laos, and has a population of 1.9 million. These sites were probably proposed as candidates for an integrated casino resort because of the economic benefits that such a development could have on the local economy.


Where Thais Gamble Today

Thai gamblers primarily play in Cambodia and Laos and for a variety of reasons, may be somewhat loyal to these destinations.


Poipet, Cambodia

The closest place for residents of Bangkok to legally gamble is in Poipet, a city in Cambodia across from Aranya Prathet, a border town in Thailand that serves as the primary overland crossing between those two countries.


Poipet is a three-hour drive from central Bangkok via a four-lane highway, although peak travel periods can stretch the commute to over four hours. An old rail system that runs from Bangkok is slated to be replaced with a high-speed line that will ultimately link Bangkok with Cambodia and China.


The casino district’s location relative to Thailand and Cambodia’s immigration checkpoints is distinctive. Patrons leave Thailand and enter the Poipet casino district without actually going through Cambodia Immigration. This allows Thai residents to enjoy a day of gaming entertainment without enduring the ordeal of passing into and out of immigration. A Thai citizen returning home need only present an identification card to re-enter Thailand, minimizing the border crossing process to just a few minutes. Non-residents visiting the casino district must first go through Thai Immigration, obtain a visa to enter Cambodia, and pass through both immigration points a second time before re-entering Thailand. Those foreign tourists trying to re-enter Thailand must also present proof of their onward travel before being allowed re-entry.


Prior to the pandemic, the casino district was comprised of 12 properties, with approximately 750 tables, 3,900 electronic gaming machines, and about 2,500 guest rooms. These properties ranged in quality from one to four stars. Like many businesses in the region, there have been economic casualties. It remains to be seen how many of these casinos survive the pandemic.


Star Vegas Resort & Club is one property that recently reopened. Owned and operated by Donaco International, a public company listed on the Australian Stock Exchange, it is the largest and most attractive hotel casino in the market. Originally built in 1999, the property features 150 gaming tables, over 1,000 slot machines, and 385 lodging keys.


Poipet’s casinos have certain competitive advantages that an integrated resort in Bangkok or Pattaya may be precluded from offering. Its casinos compete aggressively for junket customers and offer commission rates that can approach 2 percent of rolling chip volume. When one considers that until Macau’s recent change in attitude towards junket promoters, commissions were capped at 1.25 percent, this pricing strategy will give Poipet operators an advantage over any Thai casino that will have to pay a 30 percent tax rate on gaming revenue.


NagaWorld Phnom Penh, Cambodia

NagaWorld is the only licensed casino in Phnom Penh, Cambodia, a one-hour flight from Bangkok’s two airports. NagaWorld is comprised of two distinct properties, Naga1 and Naga2. Naga1 has a total of 797 rooms and suites. The casino provides 1,660 slot machines and approximately 300 gaming tables. In addition, the facility offers 18 food and beverage outlets, two nightclubs, 1,072 square meters of banquet and meeting space, and a spa.


In 2017, the company completed construction of Naga2, a separate hotel casino that connects to Naga1 via an underground shopping arcade. Naga2 provides a more upscale gaming, lodging and entertainment experience that is specifically designed to accommodate premium customers. It consists of multiple gaming rooms with space for up to 2,500 slot machines and 300 gaming tables, private gaming salons, and additional gaming rooms for junket promoters. In addition, Naga2 offers a 2,200-seat theater, four restaurants, an 11-station food court, two nightlife venues and multiple entertainment stages.


Naga2 also contains rooms and suites specifically designed for VIP customers. These suites are unique in that a group of sleeping rooms is clustered around a central area that contains baccarat tables, a karaoke lounge and other amenities. This arrangement affords a group of players the opportunity to socialize and play in a private environment removed from the main gaming floor.


The company is now moving forward with development of Naga3, a $3.5 billion hotel and entertainment complex that will connect to its existing properties. When completed the combined facilities will offer over 5,000 hotel rooms, 1,300 gaming tables, and 4,500 slot machines, making it one of the world’s largest integrated resorts. NagaWorld will continue to be a formidable force in Asian gaming even with the eventual opening of casinos in Thailand.


Singapore

Singapore has long been a favored destination for Thai gamblers. Frequent flights into Changi International Airport, a modern transportation infrastructure, coupled with two of the most attractive integrated resorts in Asia make the city-state ideal for higher-worth players. Both Resorts World Sentosa and Marina Bay Sands have committed a total of $5 billion for expansion of their respective properties. Those improvements include additional lodging keys, entertainment venues and gaming space. Keeping those properties fresh and vibrant will be essential in order to compete with more convenient IRs in Thailand.


Macau

The Macau government has made growth in international tourism a key requirement for casinos seeking to renew their gaming concessions. As part of the re-tendering process, casinos will have to provide business plans that detail how they intend to grow visitation from countries outside of China. Thailand may be one market that one or more operators will focus on. Prior to the pandemic, Thais made up a tiny fraction of overall visitors to Macau. Understandably, the vast majority of visitors were from Guangdong province and Hong Kong. Nevertheless, the number of Thais entering Macau was so small, just 151,000 in 2019, as to be categorized under “Other Asian Countries.”


Laos

Several casino properties in Laos are located near the border of Thailand, and they have long catered to the region’s gamers. These include Dansavanh Nam Ngum Resort north of Vientiane, Kings Roman Casino in Bokeo near Chiang Rai, and Savan Vegas directly across the Mekong River from Isan province. The committee clearly chose two provinces in the north to intercept gamers that currently travel to Laos.


It is still premature to forecast the impact that Thailand’s emerging casino industry will have on casinos in other countries that currently depend on Thai gamers. The more astute operators such as NagaWorld, Marina Bay Sands and Resorts World Sentosa are already taking steps to safeguard their market share by adding new amenities. Others would be wise to do the same.


What is clear is that with a large resident population that has very limited access to casinos today, the five casinos that are ultimately developed will not have to compete aggressively with other countries in order to be successful.


Andrew Klebanow is co-founder and a partner at C3 Gaming, a consortium of domestic and international gaming consultants. He can be reached at Andrew@C3GamingGroup.com. View all articles by Andrew Klebanow


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