Integrated resorts located in Thailand’s capital city of Bangkok should generate between US$2.5 billion and US$3 billion annually – and possibly up to US$5 billion – largely driven by foreign tourists, according to an in-depth analysis by investment bank JP Morgan.
The report, released late Wednesday, sizes up the revenue opportunity for IRs, or entertainment complexes as they are being referred locally, based on the city’s access to three key demographics: local patrons in Bangkok, regional Thai patrons from outside Bangkok and foreign inbound tourists.
It also outlines two possible scenarios, with annual revenues of US$2.5 billion to US$3 billion should one or two Bangkok licenses be awards and US$5 billion in the case of three.
“Unsurprisingly, gross gaming revenue (GGR) from casinos – despite occupying only ~5% of gross floor area – will likely drive 90%+ of total revenues and we estimate 50%+ of revenues to be from foreign tourists,” JP Morgan’s analysts wrote.
“Also of note, we assume Thailand’s gaming market size in 2033 to be US$1.5 billion to US$5 billion per annum. For the purpose of comparison in 2023, Macau casinos generated revenues of US$27 billion (including US$4 billion of non-gaming) followed by US$7 billion in Singapore (including US$1.8 billion of non-gaming), US$5 billion in the Philippines and US$2 billion in in South Korea.”
The analysis benchmarks Bangkok against Singapore given the comparable population and urban sizes of the two jurisdictions, although JP Morgan notes some key differences that are also worth considering.
“First, Thailand may offer more and diverse tourist attractions than Singapore, which may lead to a lower patron conversion rate among tourists and locals to casinos versus Singapore,” the bank said.
“Second, Thai locals generally have relatively lower levels of income/wealth compared to Singaporeans, which could reduce the average local spending and, given the comparatively higher local entrance fee in Thailand, potentially lower penetration rates.
“Despite these differences, Singapore’s successful integration of casinos into its entertainment and tourism sectors provides a useful model for Bangkok and makes it a valuable point of reference.”
A draft casino bill currently working its way through parliament has proposed entertainment complexes with a maximum gaming area of 5% of total IR floor space, but with attractive 30-year licenses available for operators. The government has also flagged its desire to invite international investment into such complexes, opening the door for the world’s leading gaming firms to enter the Thai market. Las Vegas Sands, MGM Resorts, Wynn Resorts and Galaxy Entertainment Group are among those to have confirmed an interest.
According to JP Morgan’s analysis, Bangkok-based operators could expect to generate annual EBITDA of a combined US$400,000 to US$1.5 billion per annum on margins of between 25% and 35%.
Such complexes could also add up to 1% to Thailand’s GDP.
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