Business owners in Nepal’s southern and eastern border towns widely agree that casinos have increased tourist flow, especially from India, giving a much-needed boost to the tourism income and growth in the luxury hotels outside the Kathmandu valley.

But they also warn that the surge comes with rising legal and security concerns.

They say Indian visitors should be able to travel safely to play in casinos, but checks are necessary to ensure they bring only money—not other prohibited items. For that, they argue, casino operators must follow all state-mandated provisions, standards and conditions.

“Casinos have increased tourist activity in Bhairahawa and other border cities, which has helped protect surrounding businesses too,” said Thakur Kumar Shrestha, former president of the Siddhartha Chamber of Commerce and Industry. “But casinos must follow the rules.”

He added that agencies must stay alert because players could bring in weapons under the guise of cross-border entertainment.

As complaints have grown that casino operators are ignoring regulations, authorities have begun paying closer attention. Social media and news reports have amplified allegations of illegal activities inside casinos, prompting regulatory scrutiny.

Chandra Prakash Shrestha, president of the Siddhartha Hotel Association, said operators must remain vigilant to keep the industry controversy-free.

“Businesses must verify customers before allowing them inside, keep proper identification records, and install CCTV cameras that clearly capture faces,” he said. “The administration must also take precautions, but excessive strictness could discourage customers.”

He added that the practice of letting Nepalis into casinos has fuelled negative publicity and must stop.

Government agencies say casinos in border regions have become controversial because they are not following standards and conditions under the Casino Regulation. According to officials, repeated violations have raised concerns.

Regulators such as the Department of Tourism, the Revenue Investigation Office and district administration offices have flagged operational issues and sought clarifications from various casinos.

The District Administration Office, which oversees security, has stressed the need for strict compliance.

Regulators have objected to some casinos running table games even though only modern machines or electronic gaming equipment are permitted in certain locations.

Despite the clear prohibition on Nepalis entering casinos, operators are reportedly creating fake Indian Aadhaar cards to let them in. Authorities have demanded explanations in several cases.

The Revenue Investigation Office in Butwal has also sought information amid suspicions of revenue leakage due to non-compliance. Following public complaints, the Department of Tourism issued a 12-point directive to casinos on November 14, stating that licensed operators had failed to comply fully with the law, standards and existing instructions.

The directive orders strict adherence to the Money Laundering Prevention Act, the Tourism Act and the Casino Regulation. It bans foreign-currency transactions without Nepal Rastra Bank’s approval and requires a regular submission of reports under both casino and anti-money-laundering rules.

Casinos must update customer identification systems and biometric data and provide them when asked, preserve CCTV footage for at least six months and refrain from operating under third-party contracts. Operating casinos at unlicensed locations is prohibited.

Companies must also deduct withholding tax on winnings and issue proof of tax deduction. Online gambling is entirely banned.

The department has warned that non-compliance during inspections will lead to legal action.

Nearly a month earlier, the Revenue Investigation Office in Butwal had written to casinos demanding nine categories of information.

It requested details of licences, types of games offered, cash and financial transactions, withholding-tax filings, Nepalis entering with fake Aadhaar cards, use of banned Indian notes, the status of six-month CCTV storage and tax-clearance and licence-renewal documents.

Only a handful of casinos submitted the required information.

Madhav Prasad Pokharel, Chief District Officer of Rupandehi, said the tourism department has been actively reviewing deficiencies. “Once the state creates rules, everyone must follow them,” he said.

“This applies to casinos too. We have called operators for meetings and issued directives.” Ensuring compliance, he said, will help address shortcomings. “No activities that harm society can be allowed. The administration will remain alert on security matters.”

The Department of Tourism grew more concerned after receiving increasing complaints that casinos were operating table gambling and allowing Nepalis inside. Lila Dhar Awasthi, director and information officer at the department, said such complaints have surged.

“We are getting reports from everywhere. This issue has also come up in our discussions with stakeholders.”

According to a district administration source, not a single casino in the district has fully complied with the standards.

“Although we have not conducted formal inspections,” the official said, “operators themselves admit they have not met even 50 percent of the standards.”

Awasthi said casinos have allowed Nepalis inside and failed to keep proper records of players. Operators in Bhairahawa declined to comment.

The problem is not limited to the western front. In Biratnagar, inside the casino of Ratna Hotel, customers were playing under flashing lights when chaos erupted.

A clash between groups linked to controversial businessman Abhishek Giri and UML district committee member Kiran Lama turned the casino floor into a battleground. Although Nepalis are barred from casinos, lax policing has allowed such activities to flourish openly.

The fight, authorities say, reflects deeper problems—political protection, unchecked legal violations and economic crimes occurring inside casinos. By the time police arrived, both groups had fled. The clash was not just a personal dispute; it was the consequence of years of illegal casino operations in Biratnagar and other eastern towns.

Despite the ban, Nepalis make up a majority of customers in eastern casinos. Such incidents have occurred repeatedly—some becoming public, many kept hidden. From Biratnagar to Birtamod, Dhulabari and Kakarbhitta, casinos are openly violating the law, raising questions about enforcement and political will.