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Mongolia: the next stop for casinos in Asia

Mongolia: the next stop for casinos in Asia

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All of the jokes about Mongolia are based on a simple and very obvious theme. For example, can a Mongolian make you laugh? Genghis Khan. But here is a one-liner about Mongolia that isn’t a joke, the country’s Parliament is considering a Bill to legalise casinos, betting and lotteries.

With its stunning steppes and unique wildlife, Mongolia is being increasingly promoted as a distinctive tourist destination and the idea is that these foreign visitors will want to relax at the tables or on the slots following their daily outdoor exertions.

Expanding tourism is a Government priority

This landlocked and sparsely populated East Asian outpost, bordered only by China and Russia, has not had its own casino in more than 20 years, but with mining and agriculture representing 40% of the country’s GDP, the need for diversification is clear. Expanding tourism is a priority and with the Government declaring the period 2023 to 2025 as ‘The Years to Visit Mongolia’, an increased influx of visitors could make investment in a gaming industry more attractive.

With countries across Asia now offering casino and gambling options to millions of Chinese visitors, the thinking is that Mongolia has an opportunity to capitalise.

The Mongolian people themselves are traditionally opposed to gambling. Its civil servants are forbidden from gambling in other countries whilst travelling abroad, and the new Bill will be foreigner-only, forbidding Mongolian citizens from gambling themselves.

Still a sensitive issue

Casinos have suffered an unfavourable reputation in Mongolia since the late 1990s, when a casino located in the Genghis Khan Hotel in the capital city of Ulaanbaatar was closed down amid allegations of corruption, money laundering and suspected links to the murder of Prime Ministerial candidate, Zorig Sanjaasuren, an outspoken opponent of the casino.

It appears that casinos are still a sensitive issue in Mongolia, however, it is felt by supporters that if the Government restricts the licences to foreigner-only, then support would be more forthcoming.

This new Bill proposes the issuing of casino operating licences with a term of 30 years. Upon expiry of this period, 50% of a casino’s equity would pass to the Government and the licence could then be extended by a further 10 years. Once issued, the transfer of a licence would be forbidden and a 40% tax on profits would be applied to all profits, as is the case in Macau. A proportion of this Government revenue would be formally earmarked for tourism development. The proposed law also provides first-mover advantage, with the first approved operator securing a five-year monopoly.

A minimum investment of US$300m

Applicants would also be required to commit to a minimum investment of US$300m, with Minister for Justice, Nyambaatar Khishgee, telling Parliament: “The aim is to create a real investment that will be adapted to the specifics of our country.

“$300m is the threshold needed to make a real investment from scratch, not just to rent a ready-made building and start operations.”

Under the terms of the Bill, casino development would be permitted within a 1,000-hectare free trade zone in Khushigt Valley, close to New Ulaanbaatar International Airport and 50km south of the capital.

Online gambling is also illegal in Mongolia, with the country’s Communications Regulatory Commission constantly seeking to identify and block offending operators.

One form of gambling that is currently informally allowed is betting between friends at horse-racing events, the nation’s favourite spectator sport. It is believed that new laws could also create opportunities for some form of sports betting activity but, at present, this is only speculation.

A logical next step (or ‘steppe’)

The real point, as always, is that gambling provides an invaluable source of tax revenue for Governments across the world and when responsibly regulated and operated, it can sit hand-in-hand with all other forms of tourism and visitor activity to create a broader leisure perspective. With China as an immediate neighbour, and individual wealth increasing all the time amongst the Chinese, the ability to offer this entertainment option, in such a naturally beautiful part of their continent, seems a logical next step.