Nepal needs more flights, better infrastructure, for casinos to thrive

Nepal, casino

Nepal’s casino industry is slowly reopening after the pandemic, although better infrastructure and greater flight connectivity are key for helping the industry to develop in the longer term, the head of Casino Association of Nepal says.

The Himalayan nation has 11 casinos housed in five-star hotels and 11 so-called mini casinos – effectively electronic gaming rooms – in four-star hotels. All were forced to close due to Covid in March 2020 for a period of 18 months.

They were permitted to reopen at the end of September last year, but faced another short shut down towards the end of the year due to the spread of Omicron.

“The first four-to-five months were very slow,” said Binod Shrestha, president of the Casino Association. “We were shut down for another 10 days, but have been open again now for about a month. The vaccination rate in Nepal is between 60 and 80 percent and we are seeing some movement in the casino industry.” 

Nepal has had an air corridor in place with India since the end of 2020, but restrictions were eased further from January of this year to allow quarantine-free entry for vaccinated travellers. A negative PCR test is required 72 hours prior to departure. 

Early indications have been positive, with tourist arrivals surging 116 percent in February from the same month a year earlier to 19,766 and up from 18,000 in January, however it’s still far below the 100,000 that used to visit during Spring. The majority of arrivals in the month were from India – 5,998 – with tourist authorities channeling their marketing efforts at South Asian destinations given the still limited international flights. 

Nepal’s casino industry was attracting relatively strong foreign investor interest prior to the pandemic. Its key attraction is its proximity to India, where casinos are banned apart from in the southern coastal state of Goa and in Sikkim in the north. 

Understanding India

Indians make up about 90 percent of the market in Nepal’s foreigner-only casinos and it’s vital to understand their gaming preferences to succeed, Shrestha said. 

In recent years, China has also emerged as the largest contributor to foreign direct investment, creating growing demand from Chinese workers in the country.

According to figures cited by Xinhua, Chinese investors pledged 11.15 billion Nepali rupees ($94.65 million) in Nepal during the first two months of the 2021-22 fiscal year starting in mid-July, about half of all investment in the entire prior fiscal year. 

Most of the major Indian casino operators now have a presence in Nepal and about three to four new premises have opened in the past two and a half years, Shrestha said.

The five-star Hotel Aloft, a brand of the Marriott Group, opened in the Thamel area of Kathmandu in July 2019 and now hosts the Casino Waldo, which is backed by Chinese investors.

The Hotel Mechi Crown, which is about 5km from the border with India, opened in October 2020 and is home to Casino Vegas, which claims to be the largest in the country so far. The casino is operated by India’s Big Daddy group, which also manages one of the floating casinos in the Mandovi River in Goa. 

Just prior to the Covid crisis, India’s biggest casino operator, Delta Corp opened the 15,000 sq-ft Deltin Casino International in the five-star Marriott hotel in Kathmandu, which offers more than 220 gaming positions. While India’s Pride Group of Casinos and Hotels has a casino in the capital’s Hyatt Regency. 

Also close to the border in the Bhairahawa district is the Tiger Palace, developed by Australia’s Silver Heritage Group. At present the hotel has reopened and the casino is expected to reopen shortly. 

Nepal border investment

Shrestha said the main interest from investors is in the areas bordering India, which allow visa-free entrance to residents from Nepal’s highly populous neighbor

“People are investing in the border,” Shrestha said. “People are taking much more interest because of the foot traffic. Air traffic to Nepal isn’t so good. We have a problem with access.”

He said the Casino Association has been talking to airlines and the government in the hopes of improving air connectivity to the capital, not just for the casino industry, but for tourism as a whole. 

He said the high levels of service, friendly people and cultural attractions should make Nepal a sought after destination if transport infrastructure can be improved. 

One positive note on that front is the completion of the new international terminal at the airport in Bhairahawa after a five-year delay. Calibration flights by AeroThai have been completed and it is expected to open to commercial traffic on or before Buddha’s Birthday (May 8th) this year.

The airport is about a 10 minute drive from the Tiger Palace and will be a major driver for future growth, an industry source said. 

In the meantime, the industry has been trying to get further relief from the government, but so far without success.

Fee relief

The casinos were granted a waiver of the Rs40 million ($164,000) casino royalty fee to compensate for the 18-month mandatory closure in the fiscal year to July 2021, but they were not spared the license renewal fee. Operators need to pay Rs20 million for the license and 50 percent of that on an annual basis for renewal. 

Nepal’s casino industry has also been in the headlines in recent weeks as the government attempts to collect back payments of royalty fees, resulting in  the cancellation of casino licenses at two hotels for failing to pay their royalty fees, according to local media reports. The Yak & Yeti Hotel failed to pay Rs420 million, while the Dreamland Hotel failed to pay Rs3.8 million. 

Shrestha explains that the license back payments are related to legacy issues in Nepal’s gaming industry under which the license was granted to the hotel in which the casino is housed and not the operator. This has resulted in legal challenges from hotels claiming they are not liable for the fees, with conflicting legal judgements.