Nepal's proposed new casino law to enhance regulation and curb foreign investment
The casino industry in Nepal is emerging as an integral component of the country’s tourism sector. With a growing number of upscale hotels accommodating global tourists, the casino economy has expanded extensively. To manage this growth, the Nepali government is introducing more stringent regulations. According to The Kathmandu Post, the government seeks to mainstream casino tourism under the new Integrated Tourism Act, which also contains regulations for casinos as part of an overall strategy to better manage and monetise Nepal’s tourism assets.
Overview of Nepal’s casino industry
Over the past decade, Nepal’s hospitality sector has experienced significant growth. The number of five-star hotels increased from 10 to 26, and four-star hotels grew from 2 in 2015 to 41 by the end of the FY24. This expansion has fuelled interest in the casino industry, as high-end tourists often seek gaming entertainment. Consequently, there is a growing need for a more robust legal framework to regulate this burgeoning sector.
At present, the operation of casinos in Nepal is governed primarily by the Casino Regulation of 2013. It aimed to ensure proper oversight and control, although some loopholes remained.
The shift to the integrated tourism act
In June 2018, the Nepalese government submitted a standalone Casino Act to formalise current regulations and entice foreign operators. The proposal was put on hold, though, as casino regulation was included in the Integrated Tourism Bill, awaiting parliamentary examination. This change has vexed operators who favour a specific legal framework for the casino sector.
Key features of the proposed bill
- Existing laws permit foreign investors to hold a maximum of 90 percent stake in a casino company in Nepal. The proposed bill lowers the cap to 49 percent to keep the majority position with Nepali partners. Although this is meant to keep more economic gains in the country, critics say it might discourage large international gaming companies from investing in Nepal.
- To avoid financial defaults, the proposed bill compels hotels or resorts to hold a minimum share of 10 percent of the casinos they host. This measure is meant to bring hotel and casino interests together so that they can have better control and responsibility.
- Operators need to establish a separate company, collaborate with a competent hotel, and secure a licence to host a casino in Nepal. The fees comprise an application fee of Rs1 million, a licence fee of Rs25 million ($183,070) for a casino, and an electronic gaming licence fee of Rs10 million ($73,030). There is also an annual royalty of Rs50 million ($365,150) for casinos and Rs15 million ($109,545) for electronic gaming. Licences have to be renewed within 60 days from the date of expiration, or else they will automatically be cancelled.
- Operators are required to distribute 2 percent of their yearly profits on social development activities such as health, tourism, education, and the environment. This obligation gives the casino business a Corporate Social Responsibility (CSR) element.
Access and location restrictions
The new bill does not clarify whether the current ban on Nepali citizens entering casinos will continue, causing speculation and concern among both citizens and operators.
Initially, casinos had to be 5 kilometres away from international borders. A 2019 Cabinet decision reduced this to 3 kilometres, but the new bill proposes reverting to 5 kilometres. However, existing casinos within the 3-kilometre range will be allowed to continue operating.
To preserve Nepal’s cultural heritage, the bill prohibits casinos near religious or culturally significant sites. While this move is welcomed by many, it is seen as limiting by potential investors.
Operational restrictions and compliance
The new regulations place a number of operating constraints and compliance requirements on Nepalese casinos:
- Limit on licences: One licence used to cover a maximum of 10 electronic gaming venues, then four. The new regulation permits a single casino under one licence, and the operators have until July 2025 to comply.
- Infrastructure and security standards: Licensed casinos are required to meet strict infrastructure and security standards two years after the bill becomes law. Failure to comply would lead to shut down or fines.
- Record keeping requirements: Operators have to keep detailed records, such as player logs, share transactions, and financial activity, in order to provide complete transparency and regulatory compliance.
Investment and partnership rules
Entities wishing to acquire more than 15 percent of shares in a casino business must obtain prior approval from the Department of Tourism. Partnerships with foreign investors require Cabinet-level authorisation. Existing foreign operators with more than a 49 percent stake must adjust their shareholding within a year after the law comes into effect, potentially causing significant changes for current players.
Operators now face tougher rules, lower foreign ownership, and higher compliance burdens. While these changes aim to bring more integrity and order, they could also discourage foreign investment or cause operational disruptions.
