New casino guideline in offing

The gambling houses may have to put up collateral to obtain licence

SANGAM PRASAIN
KATHMANDU, FEB 21 -

Delay in paying royalty to the government could prove costly for casinos henceforth.

With Parliament’s Public Account Committee (PAC) instructing the government to come up with regulatory framework to regulate casinos, the Ministry of Tourism and Civil Aviation (MoTCA) has prepared a draft guidelines on casinos which says that casinos have to put up a collateral worth equivalent to the two years’ royalty while acquiring operating licence.As casinos were found to be reluctant in paying royalty and other dues to the government, the proposal of collateral was floated, said a ministry official. “The rationale behind the new provision is to ensure royalty compliance,” said a ministry official. “If a casino defaults on royalty payment, the government will seize its collateral.” Currently, casinos have to pay an annual royalty of Rs 20 million.

The guidelines, which are currently under discussion, say that the operating license can be renewed every two years. The government, through the budget, has made it mandatory for casinos to get their licences renewed every year. As per the Finance Bill, casinos failing to clear their royalties by mid-January will lose their licences. A gambling house that loses its licence will have to start afresh to obtain a new one.

The new guidelines also talk about allowing Nepali citizens in casinos. However, only big taxpayers (those having an annual turnover of Rs 250 million) will be allowed in casinos. The Department of Revenue Investigation will provide data of those big taxpayers. Casinos should issue memberships to these people, says the proposed guideline. However, they have to pay an entry fee of Rs 5,000 for 24 hours.

According to the draft guidelines, casino operators have to submit their detailed business and investment plan to the government to obtain licence. With most of the casinos relying on Nepali citizens, the guidelines say that casinos should come up with tourism packages to attract foreign clients. Casinos should register their infrastructure —from furniture to gaming machines at the ministry and should have ministry’s stickers pasted on them.

The ministry will supervise casinos every three months and will be entrusted with the whole job of monitoring them, according to the guideline. In order to regulate and enforce the guidelines, plain-cloth police personnel will also be mobilised in casinos. Hotels had been complaining that surprise police raids had terrified their clients.

The DRI had recommended the ministry to shut eight casinos failing to pay their royalty dues on time. The ministry has not been able to take a decision in this regard because of the delay in the Cabinet formation.

The DRI on Feb. 13 had dispatched a letter to the ministry asking it to shut down Casino Rad, Casino Venus, Casino Grand, Casino Royale, Casino Anna, Casino Shangri-La, Fulbari Casino and Casino Nepal after they failed to clear their outstanding royalties and dues within the 35-day deadline set by the department.

Of the 10 casinos currently operating in the country, only two—Casino Tara at Hotel Hyatt Regency and Casino Everest at Hotel Everest—have cleared their dues.

In a bid to regulate the casino business, PAC issued a series of directives to the government—from drafting a Casino Act and working procedure for casinos to amending the existing Gambling Act. PAC had directed the government on Dec. 28 to scrap operating licences of casinos that fail to clear their dues within 35 days. The DRI, based on PAC’s directive, had issued a strong notice to all the defaulting casinos asking them to either clear their dues or face cancellation of their operating licenses.

Following the PAC directives, five casinos—Casino Tara, Casino Rad, Casino Venus, Casino Grand and Casino Shangri-La—paid their royalties for the current fiscal year. However, except for Casino Tara, the other four have been recommended for action by the DRI. Three casinos—Casino Venus, Casino Rad and Casino Grand—have been recommended for action as they have not cleared their interest payment for the current fiscal year even though they paid the royalty for the current fiscal year.

According to the DRI, these eight casinos still owe Rs 355 million to the government. Despite constant pressure of revenue enforcement agencies, Casino Anna and Casino Nepal have not settled their dues. These two casinos owe Rs 244 million. Likewise, Casino Fulbari still has to pay Rs 62.1 million.

The government, for the last six months, has been tightening the screw against casinos after their repeated failure to clear royalties and dues. Continued defiance by casinos of government orders to clear their dues and bar Nepalis from entering their premises forced the government and PAC even to explore the possibility of moving them out of Kathmandu.