Gambling the Vegas way!

While I was contemplating what to write in this week’s editorial, James Packer was publicly announcing his plans to invest $400 million for a casino resort in Sri Lanka. In a speech at the Commonwealth Business Forum in Colombo, he said that his casinos would act as ‘a leading tourist mecca for the rising middle class of India, China and the rest of Asia’. Without a doubt, Packer has got his figures worked out pretty well. Here is where the government needs to make some smart moves. Going by the way India wishes to increase tourism, the authorities need to seriously consider setting up domestic gambling centres as these could give quite a significant impetus to tourism revenues. I am not advocating that India adopts gambling blindly – given the negative connotation the word exudes – but I am simply pointing out that the government should at least review the undeniable global correlation that exists between GDP growth and gaming centres.

If the worry is that legalising gambling in India could increase social exploitation, one could explore setting up of such centres in stand-alone territories like Andaman and Lakshadweep islands, test out the initial waters and economic benefits, and depending upon the experiences and lessons learnt, open up more centres in other states. Opening highly regulated casinos in such stand alone territories may actually give a huge boost to employment and lifestyle in these regions.

Las Vegas is a case in point. Thanks to gambling, Las Vegas today has an impressive employment rate and low tax burden. Similarly, legalising gambling turned the odds in favour of Mississippi. In another case, Tunica – one of the erstwhile poorest counties in the Mississippi delta – today boasts of a low unemployment rate, low food subsidies and low state welfare expenditure. Even during the slowdown, in the year 2010, the American Gaming Association confirmed that gaming services contributed almost $125 billion to America’s GDP, apart from providing 8,20,000 jobs and raking in close to $49.7 billion from tourists. As per the Casino Association of South Africa, casinos have contributed 143 billion rand to South Africa’s GDP since being legalised in 1996.

Macau, one of the most-sought after gambling hubs in the world, has seen itself growing at light-speed! The province not only has seen a surge in employment and lifestyle but has seen a huge increase in per capita income, which today stands at around $78,000 – 10 times the average Chinese income and notches above the average American income. Macau witnesses around 80 million Chinese visiting this province, spending over $100 billion every year. Today, by various estimates, the direct and indirect revenues earned by Macau could be six times that of Vegas. The Statistics and Census Service of Macau confirmed recently that the region’s quarterly economic growth was propelled by an 8.5 per cent increase in exports of services, specifically gaming.

However, amidst all nations, one nation that has exploited the benefit of capitalism, yet kept socialism intact is Singapore. It is a classic case of ‘Happy Capitalism’. The nation today has some of the world’s largest casinos and generates revenues close to what Vegas generates, but has been successful in keeping the social malaise out of the system. The nation formulated strict laws that kept the doors of the casinos closed for Permanent Residents (Prs) and locals. The Singapore government does however allow locals to stay inside a casino for 24 hours straight on the payment of $100 (Singaporean dollars) or have multiple entries per year on the payment of $2000. At the same time, the government also regularly educates casino operators about discouraging locals and has released mandates for creating ‘virtual walls’ between locals and casinos.

Moreover, with the setting up of the National Council on Problem Gambling (NCPG), families can get their family members banned from entering casinos. As of last count, around 90,000 people have been banned on individual requests while another 1,500 have been banned on family request. And of course, any citizen who has filed for bankruptcy is by default banned. Additionally, no direct casino advertisements are allowed in any form. Taking it steps ahead, the government has banned opening of any independent casinos; only resort-casinos are given licenses to operate.

Looking at the Singapore example, why can’t the Indian government invite international casino giants to open integrated casino resorts in Andaman and Lakshadweep and convert them into the Macaus of India? Like I mentioned above, it would not only increase tourism but would also encourage tourists visiting south-Asia to alter their itinerary and add India to their travel plans. However, like Singapore, there should be strict rules in order to keep locals and Indian nationals away from gambling, or there should at least exist structured caps on betting amounts, depending upon income and family approval of Indians.

But under no circumstances should such resorts be replicated in the hinterland and under no circumstances should locals be allowed to enter casinos regularly. With Kazakhstan, The Philippines, North Korea and Taiwan, planning to do a Macau themselves, it would be a bad bet to for India to not explore this potential opportunity!

The author is a management guru and director of IIPM Think tank