Thailand is positioned to become a key player in the global gaming and tourism sector, with potential revenues from integrated resorts (IRs) forecasted to significantly impact its economy. According to a recent analysis by JP Morgan, these resorts could generate between US$1.5 billion and US$5 billion annually, potentially adding up to 1% to the nation’s gross domestic product (GDP).
Strategic development of integrated resorts:
The analysis highlights the potential for the development of large-scale projects in Bangkok, with an estimated budget of US$3-6 billion. These projects could start commercial operations by 2031, bringing substantial economic benefits, including a projected EBITDA of US$0.4 billion to US$1.5 billion and an impressive internal rate of return of 12 to 29 percent.
“The government’s flexibility in awarding licenses will be crucial, allowing for either a single license with a substantial minimum investment or multiple smaller licenses to spur widespread development,” stated JP Morgan analysts. They expect one to three licenses to be awarded initially for projects in Bangkok, followed by smaller regional complexes.
Integrated resorts in Bangkok are poised to attract not just local and regional patrons, but also a significant number of foreign tourists. This influx is expected to drive gross gaming revenue (GGR), which, despite occupying only about 5% of the total gross floor area, is projected to account for over 90% of total revenues.
“Unsurprisingly, gross gaming revenue from casinos will likely drive 90%+ of total revenues and we estimate 50%+ of revenues to be from foreign tourists,” noted JP Morgan’s analysts, as reported by Inside Asian Gaming (IAG). They also highlighted that Bangkok’s IRs could compete with major gaming hubs like Macau and Singapore, offering unique advantages due to Thailand’s diverse tourist attractions and cultural offerings.
Regulatory and market dynamics:
Thai government is navigating through legislative processes with the Entertainment Complex (EC) Bill expected to be deliberated in parliament later this year. This move follows a public hearing in September, signaling a strong governmental push towards formalizing the gambling sector to redirect the substantial underground economy back into the formal sector.
Potential operators, including global giants like Galaxy Entertainment Group, Genting Singapore, and MGM China, are anticipated to form joint ventures with local entities to enhance their bids with regional expertise, particularly in land and property management.
However, the entry into the casino business carries potential risks, particularly related to investment based on environmental, social, and governance (ESG) criteria. “Gambling exclusions apply to around half of sustainable AUM globally, making it less common than other norm-based policies,” the JP Morgan report highlighted, suggesting a possible challenge for Thai companies aiming to attract ESG-focused investments.
With the legislation expected to be in place between 2024 and 2026 and official bidding projected for at least 2028, the path towards realizing these integrated resorts is clear but requires careful planning and execution. The successful integration of these complexes could not only enhance Thailand’s tourism and cultural appeal but also significantly boost its economy.
