Govt gives Casinos 15 more days to get new licences

KATHMANDU, MAR 22 - Showing leniency towards casinos defaulting royalties, the government has decided to give the gambling houses an additional 15 days to obtain new operating licenses. The previous deadline given to the casinos to get new license as per the Casino Regulation 2013 expired on Friday.

“A Cabinet meeting on Thursday decided to extend the deadline until April 4,” said Madhusudhan Burlakoti, chief of the Industry Division at the Ministry of Culture, Tourism and Civil Aviation.

This is the fifth time the government has extended the deadline for casinos that have to pay more than Rs 657.66 million to the government. There are 10 casinos in the country, eight in Kathmandu and two in Pokhara.

Among them, Casino Grand housed in Hotel Grand in Pokhara and Casino Shangri La housed in Shangri La Hotel Kathmandu have been shuttered.

According to ministry officials, they extended the deadline after the Casino Association of Nepal wrote to the ministry, stating the casinos are willing to operate legally and that the issue should be resolved through a dialogue.

“The association asked the government to extend the deadline first before holding talks,” said Burlakoti. The association has asked the ministry to rethink over five major clauses of the Casino Regulation enforced on July 11, 2013, which they think are very strict to run the business, he said. The casinos have also asked to reduce the royalty fee, which was doubled under the new regulation. The clauses that have concerned the casinos include only four-star properties are allowed to operate electronic gaming or mini casinos ; operators must pay the client after windfall tax is levied on them; casinos should not be located within a 5-km distance of international border points; detailed identity records of gamblers should be kept for at least six months.

“As casinos are willing to operate legally, the government could consider some of their demands,” said a high-ranking ministry official. “However, we are not in favor of reducing the royalty fee.” This means, the government could amend the regulation by removing some of the clauses.

Burlakoti said the government has given the casinos a last chance. “And, if they fail to clear the dues and obtain new licenses this time, we have no other options but to close them down forcibly,” he said.

On December 29, 2010, the now-defunct Public Accounts Committee (PAC) had directed the government to scrap the licenses of casinos failing to clear their royalty dues. However, it was unable to take any action against the tax defaulters.

On Jan 1, 2013, the erstwhile Economic Infrastructure Committee of the Cabinet had directed the ministry to renew the operating permits of casinos clearing dues for the current fiscal year by April 13, 2013.

The Tourism Ministry’s notice issued on February 7, 2013, said the government would shut down gaming houses and annul their licenses if they defy government directives as per the Financial Bill. However, the government has failed to act accordingly.

The regulation enforced last year reflects its policy to clamp down on casinos habitually defaulting on government taxes and disregarding the rule barring Nepalis from entry.

According to the regulation governing casinos and electronic gaming, only foreign passport holders may play at the casinos in five-star hotels. Nepalis are not even allowed to enter the casinos .  

Another strict measure the government has adopted is related to the operation of gaming houses and payment of royalty. The Financial Bill 2013-14 has doubled the existing royalty amount to be paid to the government by the casinos and electronic gaming houses.

Under the bill, a casino is required to pay Rs 40 million in annual royalty fee to the government, up from Rs 20 million earlier. For electronic gaming, the annual royalty fee has been fixed at Rs 30 million.

Besides, operators must deposit amount equivalent to a year’s royalty fee at the Tourism Ministry as bank guarantee and if Nepalis are found playing or entering a casino, the government will seize the deposited amount. The royalty should be paid to the ministry, which has been given the administrator rights, within two months of the start of the new fiscal year.

A paid-up capital of at least Rs 250 million is required for the operation of casinos , while the capital for electronic gaming has been fixed at Rs 150 million. Casino and electronic gaming operators are required to pay an application fee of Rs 500,000 and Rs 200,000, respectively.

Operators need to renew their licenses annually by paying 50 percent of the operating license fee. Casinos can be operated in joint investment with foreign companies, according to the regulation. Operators must set a limit for chips or gaming.

The operators should allocate 2 percent of their profits to corporate social responsibility.

Royalty Dues

CASINO    DUES

Casino Nepal (now Mahjong)    Rs 266.80 million

Casino Fulbari     Rs 160.86 million

Casino Anna     Rs 152.68 million

Casino Royale    Rs 49.50 million

Casino Everest     Rs 17.18 million

Casino Venus     Rs 3.50 million

Casino Rad     Rs 3.33 million

Casino Tara (now Casino Star)    Rs 2.9 million

Casino Grand     Rs 0.82 million

(Source: Tourism Ministry)

Source: The Kathmandu Post