The government has moved to bring a Casino Act to streamline the sector and encourage new international players to enter Nepal, as the gaming industry is expected to boom amid the ongoing development of nearly a dozen five-star hotels across the country.

“We will be submitting a draft to the Cabinet next week for its approval in principle to prepare a Casino Bill 2018,” said Ghanshyam Upadhyay, spokesperson for the Tourism Ministry. “The Law Ministry has given its okay to a preliminary draft. After the Cabinet’s approval, we will begin to draft the bill. The move to introduce the Casino Act is to enhance investment and employment in the industry which is expected to grow quickly,” he said.

Even though the act is ostensibly aimed at adopting a liberal policy to attract foreign investors, industry insiders said its sole objective is to bring the existing casinos into line as they have been operating freely on the strength of the Supreme Court’s interim orders without paying taxes and royalties to the government.In 2013, the Tourism Ministry scrapped the licences of casinos defaulting on royalties as per the Casino Regulation 2013. However, the gaming houses reopened their doors barely a year later following a court order allowing them to operate.

“The ruling, in fact, is not clear as it does not say whether the casinos should be allowed to operate under the old or the new regulation,” said an official of the Department of Tourism which regulates the casinos.

“The most complicated matter for the department is that it cannot collect taxes and royalties as it has scrapped their licences. In the legal sense, the casinos are operating unlawfully. But, we have to honour the court’s ruling,” he said. The recently released budget statement said that there were seven casinos

in the country; actually, there are 10, three of them running on the strength of the court order. “Most of the casinos are taking advantage of the legal complexity. They are even reluctant to pay the annual royalty of Rs30 million fixed by the Financial Act. We do not know when the court will issue a final verdict.”

The government did not want to wait for the final decision, so it decided to launch a new act. “If the Casino Act is introduced, it will automatically supersede the Casino Regulation and also the court’s orders,” said officials. “It will also regulate the casinos in a more managed way and protect the investment of foreign investors.”

Last March, the department issued a public notice ordering delinquent gaming houses to settle their outstanding royalty payments within 35 days or face legal action. Casino Royale housed in the Hotel Yak and Yeti, Casino Rad housed in the Radisson Hotel and eight mini-casinos located outside the Kathmandu Valley owe the government millions in annual royalties, the department said.

The department told the gaming houses to clear their dues including additional fees and penalties, but it could not take further action as the case was sub-judice. The department is currently working to ascertain the actual amount of fees and taxes the casinos owe the government.

As per the regulation, casino operators have to pay a fee of Rs20 million to obtain a casino operating licence. They are also required to renew the licence annually by paying 50 percent of the operating licence fee.

Casino operators must pay the government an annual royalty of Rs30 million set by the Financial Act 2017-18. Moreover, they are required to deposit an amount equivalent to a year’s royalty fee at the Tourism Ministry as bank guarantee. The money must be deposited within two months of the start of a new fiscal year.

According to the documents obtained by the Post, Casino Royale run by Surendra Bahadur Singh under Gilt Investment operates under the old regulation since the Supreme Court issued the interim order on March 28, 2016. It has paid Rs35.3 million in several installments since December 2016, and still owes millions. Royale has not renewed its operating licence.

Casino Rad operated by Kishore Silwal, Kausal Silwal and Usha Thapa Silwal under Rock International has paid only Rs12.5 million and owes millions in taxes to the government, officials said. The owners have been operating the casino under the court ruling since May 2016.

As per the notice, four mini-casinos housed at the Hotel Sweet Dream in Mahendranagar, Hotel Lacoul in Bhairahawa, Hotel Sneha in Nepalgunj and Hotel Dhaka in Kakarbhitta are continuing their business without paying the annual royalty. Four other mini-casinos under Rock International are housed at the Hotel Sathai in Dhangadhi, Hotel Nans in Bhairahawa, Hotel Suraj in Birgunj and Riya’z Hotel in Kakarbhitta.

Among the 10 casinos currently operating in the country, six are running under the Casino Regulation 2013. The latest entrant is the five-star casino property Tiger Palace Resort at Kotihawa, Bhairahawa. The casino housed at the Hotel Everest has closed down. Licences are issued to casinos housed in five-star hotels only. Other hotels are allowed to house mini-casinos where electronic gaming is available.

Annual royalty hiked to Rs40m

The Financial Act has increased the annual royalty for casinos by Rs10 million to Rs40 million from the coming fiscal year 2018-19. Currently, casino operators must pay the government an annual royalty of Rs30 million set by the Financial Act 2017-18. The royalty amount is set by the Finance Ministry.