THE ROAD TO MODERN THAILAND
Thailand and its estimated population of 70 million lay in the heart of Southeast Asia. Among its peers, it is distinct in that western powers never colonized the country during the colonial period of the 19th century. During the colonial period, Thailand (then Siam) was the uneasy buffer between French-controlled Cambodia, Vietnam, and Laos, and the British (present in the region since the 18th century) in Myanmar and several territories of the Malay Peninsula—the British and French created friction in the area over their fierce competition for naval dominance.
Still, history leaves marks. Over time Thailand was forced to cede a substantial amount of its territory. They relinquished claims on several Malay states to the British in exchange for loans to build railroads and the right to legal jurisdiction over the British citizens who lived in Thailand. Through a more direct approach, the French blockaded Bangkok until they relinquished Laos to them. Throughout the 19th and 20th centuries, the boundaries of Thailand would expand and contract, and this turmoil would leave scars in Thailand and the memories of generations of Thai, informing their politics and society even today.
Thai pride emerging from its surviving sovereignty resulted in pressure to modernize and create a strong sense of nationalism within its citizens. Thailand’s civilian leaders, military and police leadership, royal family, and kings – each with different levels of comfort with civilian government and rights, lead Thailand with differing levels of comfort with civilian government through a great deal of chaos to the modern constitutional monarchy within the Kingdom of Thailand. Today, the 2016 Thai Constitution establishes a Prime Minister as the head of government, who is elected by Thailand’s popularly elected
house of representatives and the Thai military’s appointed members of the Senate.
THAILAND AND ITS PEOPLE
Thailand is a beautiful country of hills, mountains, and over a thousand miles of coastline along the Gulf of Thailand and the Andaman Sea. Thailand has the Lao PDR and Myanmar to the North; the Lao PDR and Cambodia to the East; Malaysia to the South; and Myanmar to the West.
Thailand’s people include ethnic Chinese, Malay, Lao, Burmese, Cambodians, and Indians. Thailand’s national and official language is Thai, with English being a mandatory part of secondary school education and widely understood throughout the country.
Thailand’s two primary economic engines are exports of manufacturing, agricultural, mining, and automotive products, which comprise around 70% of the country’s GDP; tourism, at close to 20% of Thailand’s GDP; and agriculture, at about 9%.
As a member of the Association of Southeast Asian Nations, Thailand has direct access to a market of over 660 million people.
At the beginning of the last “Hockey Stick” of growth in Thailand’s tourism, yearly tourist arrivals grew by 186%, from approximately 14 million in 2006 to nearly 40 million in 2019,
before the COVID-19 pandemic. Thailand’s tourism peak in 2019 represented about 18.4% of the country’s GDP.
Thailand’s Ministry of Tourism and Sports reported that in 2019, Thailand saw over 40 million tourist arrivals who each spent an average of USD 1,384, totaling USD 54,135M in expenditures within the country. COVID-19 caused a painful downturn when the Thai government closed the borders to tourism from 2019 to 2021. The country saw less than half a million arrivals in 2021.
Current tourism data indicates a good recovery. Pent-up demand saw the total number of international tourist arrivals to Thailand for 2022 grow to 11.2M. If we were to extrapolate the visitor revenue for Thailand for these visitors for 2022, based on the January data, averaging USD 601 in spend per international tourist, it would project USD 6.7B in global tourist revenue for 2022.
Generating USD 6.7B in international tourism revenue is an excellent recovery considering Thailand only completely reopened to tourism on 1 October 2022, removing requirements
for proof of vaccination and ATK tests.
GAMBLING IN THAILAND
In 1935, Thailand’s government made gambling generally illegal throughout the country. The primary forms of legal gambling in Thailand are horse racing and, more recently, the national “Lottery Thailand,” created in 1974 to generate revenue and combat Thailand’s large illegal gambling market.
Illegal gambling is primarily made up of lotteries based on the last two or three digits of the official government lottery draw (known as the “Huay”) and a variant that uses the last two numbers of the Stock Exchange of Thailand index at the close of each session (the “Huay Hun”). Together, these illegal lotteries were estimated in 1996 to handle around THB 100B per year, roughly the same as the value of all Thai rice exports in a year.
More recently, an increase in illegal access to online gambling and betting on football (American Soccer) has been growing in popularity. In 2010, over 1,700 people were arrested for gambling-related offenses during the Africa World Cup.
THE FACTORS AROUND THE LEGALIZATION OF GAMBLING IN THAILAND
Cambodia benefits tremendously from Thailand’s criminalization of gambling. Thai locals and tourists cross the border to visit its over 125 casinos, half located in Sihanoukville (Kampong Som), a coastal city of Cambodia and the capital of its province. Many of Sihanoukville’s largest casinos benefit from the extensive string of beaches around Sihanoukville’s coastline.
Advocates for legalizing gambling in Thailand see great value in retaining more visitor spending lost to neighboring markets. Others worry that legal gambling operators in Thailand would cannibalize much of tourist spend, widely distributed to service businesses within the tourism sector. This is especially so in the case of integrated resorts.
Destination gamblers in Southeast Asia in the VIP and premium mass segments remain locked up by operators in Macau, Singapore, Malaysia, and the southern Vietnamese island of Phu Quoc. These high-value players play low-margin games whose profitability is eroded by lavish comps and rebate percentage programs and made viable through volume.
Overcoming the cache of these market-leading VIP and premium mass casino operators with multi-billion dollar investments in integrated resorts, some of which are globally iconic, will take work. There may be a more substantial opportunity in the larger mass market.
Here’s what we see:
• Proximity remains the most potent factor in selecting a casino for the mass market and high-frequency customer segment.
• Having a casino conveniently located just across the border is different from having an integrated resort right where you are in Thailand.
• Still, in a region with choices, even loyal customers will maintain a rotation of several proximal casinos.
• Potential casino operators will face opposition as non-gambling tourism is the second-largest commercial sector in Thailand.
• Where trust isn’t a factor, online casinos will continue to be cannibalistic to mid to low-end high-frequency gamblers.
• Business owners in the Tourism sector will continue to politically oppose casino legalization as they feel that casinos, especially integrated resorts, will cannibalize legacy Tourist operations.
Thailand’s tourism industry will continue to recover as none of the fundamental value elements of the country have changed, and we see future demand as sustainable.
We believe there are economically solid opportunities for legalized gambling –especially for the mass market gambler.
We believe gambling advocates can overcome resistance with sensible regulations that protect the existing and cherished non-gambling tourist industry.
Whether or not legalized gambling comes to Thailand, the nation will continue to be a dominant force in international tourism as long as the fundamental values of the industry remain stable — and we have no reason to think otherwise.
