A referendum in 2009 saw one of Taiwan's outlying islands reject plans for a casino, but it has not deterred similar attempts being made.
Officials said the ministry of transportation and communication has completed a draft of the bill and is scheduled to submit it to parliament for approval in September.
Matsu and Kinmen, two Taiwan-controlled island groups off China's southeastern Fujian province, want to open casinos.
"It is an industry which can generate investment and lots of jobs," he said, estimating that the business could bring in more than Tw$10 billion (US$ 345 million) in investment and tourist income, mostly from China.
Yang admitted that a casino could have negative consequences as claimed by opponents but said he believed they could be offset and in any case Matsu residents will have the final say during a referendum later this year.
The island government pushed through a controversial bill in parliament in January 2009 to lift a decades-long ban on casinos, allowing offshore islands to build them only if approved by local residents in a referendum.