Opinion: Chuwit neglects the heavy social and economic costs associated with casinos

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Recently former politician and massage parlor tycoon Chuwit Kamolvisit suggested that Thailand, ailing from the after effects of COVID-19, should legalize gambling and encourage the opening of casinos, as a part of an all-inclusive “entertainment complex.” In an effort to offer Thailand’s many visitors a more unique experience, Chuwit recommended four locations: Pattaya, Koh Larn, Bangkok and Phuket, each with its own array of services, including cocktail lounges, massage parlors, and assorted entertainment, including amusement parks. 

The idea, in principle, is to broaden Thailand’s tourism offerings and boost badly needed revenue for national and local governments. But there’s a flaw in Chuwit’s gambit to loosen Thailand’s grip on one of society’s many vices. It’s a terrible idea.

There are no shortage of examples of cities wishing to do the same thing, all backed by the promise of new sources of revenues to refresh the coffers of local governments. The easiest example is that of Atlantic City, New Jersey. In the late 1970s, the city convinced the state legislature to allow casinos in hopes of reviving the fortunes of the town. In the first few years, it looked like it worked. Ancillary businesses opened alongside the casinos, particularly hotels to support the increased number of visitors. On paper, the local economy improved as people benefitted from the new jobs offered by Atlantic City’s new casinos.

There was one big catch. Casinos are like sponges, absorbing everything around them. Spillover effects are rare, as people wander into its doors, and walk out empty handed. A report by New Jersey’s governor-appointed special council noted that small businesses that used to be the lifeblood of the city saw their revenues badly decline. The casinos reduced the viability of some of the town’s businesses, as they became direct competitors in offering similar goods and services. This increased poverty and unemployment, leading many to conclude that luring casinos to Atlantic City had not been the catalyst for economic revival as previously hoped. 

By 2016, well before the COVID-19 pandemic destroyed casino revenues, Atlantic City’s poverty rate exceeded 36 percent, much higher than New Jersey’s average of 10 percent. Compounding Atlantic City’s problems with casinos is that it has turned into a kind of “food desert” where the casino absorbs so much local industry that local businesses die. Only recently did many residents get their first low-cost supermarket. Not before the Casino Reinvestment Development Authority (CRDA) spent $18.7 million for its construction.

Chuwit cannot wish away or wash over the many problems associated with casinos, especially problem gambling. Studies show that people that live close to a casino are twice as likely to develop problem gambling as those that live further away. That means that while Thailand will likely never know the afflictions absorbed by foreign visitors, it will have to live with the deluge of locals now facing problem gambling addictions. And if that is not concerning, it is also a symbiotic relationship with the casino, as problem gamblers often provide a significant source of the casino’s revenue.  According to the National Opinion Research Center at the University of Chicago (NORC) between 5 to 15 percent of gross gaming revenue came from problem and pathological gamblers. Worse, as demonstrated by the Institute for American Values (IAV), a considerable portion of problem gamblers come from the elderly, to which gambling provides activity and relief from boredom and loneliness.

If American examples are too far removed, Lao PDR and Cambodia’s challenges when inundated with Chinese-run casinos. Cambodia lowered its tax rates significantly to attract major casino enterprises, now with more than 150 in operation across the country. However, according to the United Nations Office on Drugs and Crime (UNODC), the increase in casinos in Cambodia has outpaced the ability of regulators to monitor and police them, which has attracted elements of organized crime that invest in the casinos, and launder the money. 

Cambodia’s efforts to become a “New Macau” aren’t exactly paying off. While estimates suggest that the casinos earn the country billions of dollars in revenue, mainly from Chinese tourists, the social costs of casinos offset the low amount collected in taxes. Further, many offer attractive places for illegal money lending, laundering and other illegal activities. For example, the Chinese have poured more than $1 billion to Sihanoukville, once a sleepy port city. The casinos and Chinese investment have transformed the city, with a third of the local population now Chinese. These social costs are too much for the locals to bear, as land and rent prices have soared. Other problems such as prostitution, human trafficking and kidnapping have also increased. 

In Laos, the government granted major concessions to the Chinese to transform a section of the so-called Golden Triangle, famous for opium into a haven for gambling. However, some casinos there, particularly the King Romans Casino, were linked heavily to revenue generated from money laundering and drug trafficking. These enterprises can look attractive to locals, but have raised alarm bells. Recently three Lao women were held against their will in northwestern Laos after seeking work as “chat girls” in a call center for the Kings Roman Casino. Now wanting to return home to their home provinces, they were held until they repaid debts exceeding $1,600.

Significant challenges need to be overcome and the idea deserves far more attention than Chuwit’s flimsy sales pitch to the Bangkok Post. Thailand is not the United States, Laos or Cambodia, but allowing casinos into the Kingdom would come with major economic and social costs. Casinos can act like all-consuming social cancers, metastasising to multiple areas of Thai society. Casinos are no panacea. Be warned.    

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