Nepal Plans Major Casino Industry Reforms, Tightens Foreign Investment Rules
Nepal’s government is moving forward with a broad set of regulatory changes aimed at tightening oversight of its fast-growing casino industry. Introduced under the proposed Integrated Tourism Bill—currently under discussion in Parliament—the new regulations would reshape how casinos operate, who can own them, and where they can be located. While designed to strengthen compliance and accountability, critics argue these measures could deter foreign investment.
Key Changes: Foreign Ownership Limits and Location Restrictions
One of the most significant shifts in the bill is the proposed reduction of the foreign direct investment cap in the casino sector. Under existing rules, foreign investors may own up to 90% of a Nepali casino. The new legislation seeks to lower that ceiling to 49%, requiring local entities to hold a majority stake.
In addition to ownership limitations, the bill addresses casino proximity to Nepal’s international borders. A 2019 amendment had reduced the minimum distance from five kilometers to three, allowing casinos to capitalize on cross-border tourism from neighboring countries like India and Bangladesh. The proposed law aims to restore the original five-kilometer rule, though it includes a grandfather clause for currently operating facilities.
This potential rollback has faced criticism from local developers and hospitality business leaders. Chandra Prakash Shrestha, president of the Siddhartha Hotel Association and owner of Nansc Hotel in Bhairahawa, called the move unfair, pointing out that existing hotels near borders were established specifically to serve regional tourists.
Licensing Overhaul and Mandatory Partnerships
The legislation also proposes restructuring how casinos are licensed and operated. It eliminates rules allowing light casino setups in five-star hotels and electronic gaming in four-star properties. Instead, casinos must exist as standalone legal entities that partner with hotels or resorts. These entities must apply for licenses through the Department of Tourism, which will examine agreements and supporting documentation before granting approvals.
To promote financial transparency and accountability, host hotels or resorts would be required to hold at least a 10% ownership stake in their partnered casino. This comes after past incidents where casino operators defaulted on taxes and royalty obligations. The Office of the Auditor General reported that although Rs1.69 billion in royalties were collected last fiscal year, another Rs1.78 billion remains outstanding—some attributed to illegally operating establishments.
Compliance and Operational Standards
The proposed framework introduces strict compliance protocols, requiring licensed operators to maintain detailed records of financial transactions, share ownership, and player activity. Licenses would be valid until mid-July each fiscal year and must be renewed annually. Failure to pay taxes or meet licensing conditions could result in immediate revocation and legal consequences.
Additionally, casino licenses would become non-renewable if their associated hotel partner loses its star rating due to suspension, downgrade, or prolonged inactivity beyond three months. Any proposed changes in location or ownership partnership would necessitate fresh approvals from tourism authorities.
New operational rules also ban casinos from operating in culturally or religiously sensitive areas and prohibit license transfers or subleases. Furthermore, the number of properties a company can operate under a single license will be reduced to one starting mid-July 2025—down from the previous limit of ten.
Transition Period and Social Responsibility Requirements
Companies currently exceeding the proposed ownership or licensing limits will be required to restructure within a year of the bill’s enactment. In addition, all foreign joint ventures must receive formal approval from both the Department of Tourism and the national Cabinet.
The legislation introduces a social responsibility clause mandating that at least 2% of annual casino profits be allocated to community development initiatives such as tourism, education, environmental protection, and employee welfare. If this requirement is not met, the same amount must be paid into the state treasury.
Operators will also have a two-year window to meet new infrastructure and security standards. Failure to comply could lead to fines or forced closures.
Under current regulations, obtaining a full casino license costs Rs25 million, while electronic gaming licenses are priced at Rs10 million. Annual royalties are set at Rs50 million for full-scale casinos and Rs15 million for electronic gaming locations. Licenses must be renewed within 60 days after expiration to avoid cancellation.
Looking Ahead
With Nepal’s hospitality sector continuing to grow—it now hosts 26 five-star and 41 four-star hotels—the evolution of its casino framework is seen as a pivotal moment for the industry. Domestic and international stakeholders are closely monitoring the legislative process, as the new rules will shape the scope and viability of future investment in Nepal’s gaming and tourism sectors.
- SCCG Management. The Gambling Industry’s Global Connector. Access Here.
- Source: SCCGManagement.com