Government Increases Casino Royalties Significantly, Threatening Industry and Jobs

Kathmandu. The government has increased casino royalty through the economic bill brought through the budget for the financial year 2083/84. The economic bill had a provision that individuals or organizations licensed to operate casinos in Nepal would have to pay an annual royalty of 50 million rupees for operating a casino. However, the government has increased this royalty to 55 million rupees.

On the other hand, for games played through modern machines or equipment, the mini-casino, which used to pay an annual royalty of 15 million rupees, has been increased to 30 million rupees. The government's 100% increase has pushed Nepal's mini (electronic) casinos into a crisis.

The government has increased the annual royalty of mini casinos from 15 million rupees to 30 million rupees with the objective of increasing revenue. Businessmen complain that the 100% increase in royalty at once, along with the increase in tax on alcoholic beverages, continuous increase in operating costs, bank interest, employee salaries, electricity, technology maintenance, and other administrative expenses, has added to the financial burden on the industry.

A businessman said, 'The state needs revenue, which is natural. However, without studying the capacity of any industry, market conditions, return on investment, current state of tourism, and the overall impact of the employment generated by that industry, imposing such a large financial burden at once can be against the state's own long-term interests.'

They stated that mini casinos operating in Nepal are not just entertainment centers. These casinos have a significant share in the tourism industry and were instrumental in encouraging foreign tourists to stay longer in Nepal, increasing hotel occupancy, bringing in foreign exchange, and keeping large private investments active.

This industry directly provides employment to an estimated 4,500 to 5,000 Nepalis. Thousands of people's livelihoods are also related to this industry, indirectly connected to many service sectors such as hotels, restaurants, transportation, security services, sanitation, food supply, information technology, maintenance, and banking.

If, due to the current policy, mini casinos are unable to operate, the impact will not be limited to businessmen alone. Thousands of workers will lose their jobs, their families will face financial crisis, the hotel business will be affected, tourist stay duration may decrease, private investment may be at risk, and the overall tourism sector may weaken.

The government may expect to receive some additional revenue immediately by increasing the royalty. However, the basic principle of economics is clear – if the industry itself weakens, the tax base also weakens. After the industry closes, the government will lose not only royalty but also income from income tax, value-added tax, excise duty, and other taxes.

According to industry experts, if the current policy remains unchanged and many mini casinos are unable to operate, there is a risk that the government could lose more than 1.5 billion rupees in revenue annually. Therefore, efforts to increase short-term revenue can lead to significant long-term economic damage.

Many countries around the world have used the casino industry as a strategic tool for tourism development. Countries like Macau, Singapore, the Philippines, Cambodia, and Sri Lanka have advanced both tourism and revenue together through clear policies, an investment-friendly environment, and a balanced tax system. They have increased revenue by making the industry competitive, not by weakening it.

The government should view the industry as a partner. Entrepreneurs are not enemies of the state; they are partners who create jobs, pay taxes, and keep the economy running. Therefore, imposing financial burdens unilaterally without dialogue with the industry is not a long-term solution, according to businessmen.

What is needed now is an immediate review of royalties, taxes, and fees. Businessmen demand that a balanced policy acceptable to all parties should be formulated through detailed discussions among industrialists, tourism sector experts, hotel entrepreneurs, labor representatives, and relevant government bodies.