The government has proposed lowering the threshold for foreign direct investment (FDI) in the casino sector and introducing regulatory reforms to better manage Nepal’s expanding gaming industry.
While these measures are intended to clarify the law and attract more global players, some operators warn that certain provisions in the proposed legislation could prove counter-productive.
In June 2018, the government drafted a stand-alone Casino Act for the first time to provide a clear legal framework for the sector and to facilitate the entry of international operators. This came in anticipation of a surge in demand, fuelled by a rapid increase in the construction of luxury hotels across the country.
However, this original plan has now been revised. Instead of a separate legislation, the proposed Casino Act is embedded in the newly tabled Integrated Tourism Bill in Parliament.
At present, the operation of casinos in Nepal is governed primarily by the Casino Regulation of 2013.
The past decade has seen a sharp increase in hotel infrastructure, with the number of five-star hotels rising from 10 to 26, including three five-star deluxe establishments. Four-star hotels have also grown significantly, with 41 in operation by the end of the last fiscal year. Until 2015, Nepal had only two four-star hotels—Hotel Himalaya and Hotel Shanker.
The proposed bill allows foreign investors to hold up to 49 percent equity in joint ventures, with the remainder reserved for domestic partners. This contrasts with the current regulation, which allows foreign investors to own up to 90 percent of a casino business.
While the existing regulation explicitly bars Nepali citizens from entering the casinos, the bill is silent on whether this restriction will continue, be modified, or removed altogether under the new legal framework.
This omission leaves a significant gap, raising questions over the government’s future stance on local people’s access to gambling establishments.
Meanwhile, the policy on the location of casinos has been inconsistent.
A Cabinet decision on June 27, 2019, amended the original Casino Regulations to allow casinos and electronic gaming houses to operate within 3 kilometres of Nepal’s international borders. This was a departure from the previous rule, which mandated a minimum distance of 5 kilometres from border points.
The new bill proposes reverting to the 5-kilometre restriction. However, it includes a grandfather clause allowing casinos already operating within a 3-kilometre radius to continue doing so if they were established before the new law comes into effect.
This inconsistency has frustrated hotel and casino operators.
Chandra Prakash Shrestha, president of the Siddhartha Hotel Association and owner of Nansc Hotel in Bhairahawa, described the shifting distance limits as senseless.
“The gaming industry is a major taxpayer and it should not be saddled with arbitrary location-based rules. Hotels near border areas were developed to cater to Indian and Bangladeshi tourists and there should not be restrictions in doing so,” Shrestha said.
Other operators allege that the frequent changes are driven by political agendas disguised as security concerns.
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