Casinos make last-ditch effort to stay in business in Nepal

The Casino Association of Nepal is scheduled to submit its recommendations to a government committee on Monday for possible amendments to the regulation.

The proposal is the latest episode in a battle of wits between the government and Nepal’s gaming houses which have continued to operate illegally flouting official calls to pay taxes.

After the casinos disregarded a previous four-month deadline to settle their dues and get their licenses renewed, the Cabinet extended the time limit by 15 days on March 20. The government decided to give them more time after the association wrote to the Tourism Ministry that they wanted to hold talks so that they could run their businesses without legal hassles.

Subsequently, a five-member committee was formed under the coordination of the Tourism Ministry Joint Secretary Ranjan Krishna Aryal. The committee was given until April 3 to make recommendations to the government on streamlining the operation of casinos after holding discussions with them.

There are 10 casinos in the country, eight in Kathmandu and two in Pokhara. Among them, Casino Grand housed at the Hotel Grand in Pokhara and Casino Shangri La housed at the Shangri La Hotel Kathmandu have been shut down. An estimated 3,500 workers are employed in all the casinos.  

“We have asked the casinos to come up with written suggestions particularly focused on the legal complexity they were facing,” said a ministry official. They have been asked to make recommendations related to removing legal difficulties, barring entry of Nepalis into the casinos and security for patrons of the casinos.

The committee is scheduled to report to the government with its recommendations on Wednesday after considering the association’s inputs. “If their demands are genuine, the government could amend some of the clauses in the regulation,” the official said.

Casinos have been lobbying to reduce the royalty which was doubled under the new regulation. They have raised concerns over clauses restricting casinos and mini casinos (electronic gaming houses) from operating within a 5-km distance of international borders.

Other concerns are allowing mini casinos to operate only inside four-star properties, giving customers their winnings only after deducting windfall tax and keeping identity details or visual records of gamblers for at least six months.

Casinos owe the government more than us$ 6.7 million in outstanding taxes and royalties. The issue of casinos came to light after it was found that many of them had been operating without renewing their licences and defaulting taxes since 2006.

On Dec 29, 2010, the now-defunct Public Accounts Committee (PAC) had directed the government to scrap the licenses of casinos failing to clear their royalty dues. However, it was unable to take any action against the tax defaulters.

On Jan 1, 2013, the erstwhile Economic Infrastructure Committee of the Cabinet had directed the ministry to renew the operating permits of casinos clearing their dues for the current fiscal year by April 13, 2013.

The Tourism Ministry’s notice issued on Feb 7, 2013, said the government would shut down gaming houses and annul their licenses if they defy government directives as per the Financial Bill. However, the government has failed to act accordingly.

Finally, the government enforced a new regulation last year under its policy to clamp down on casinos habitually defaulting government taxes and disregarding the rule barring Nepalis from entry.

The Financial Bill 2013-14 has doubled the existing royalty to be paid to the government by the casinos and electronic gaming houses. Under the bill, a casino is required to pay us$ 413,000 as annual royalty to the government, up from us$ 206,000 earlier. For electronic gaming houses, the annual royalty fee has been fixed at us$ 310,000.