Please don’t set up a casino in Sarawak

Sarawak’s liberal outlook is better displayed in other ways and positioning the territory as the leading advocate of a multi-cultural Malaysia.

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Published by TheMalaysianInsight & BusinessToday, image by BusinessToday.

As a “one-stop centre” (OSC) for gambling (or otherwise also known as “gaming”), casinos offer and provide a “dazzling” array of gambling activities under a consolidated and integrated hub. This unlike number forecast operators (NFOs)/number forecast totalisators (NFTs) and special draw jackpot (or lottery draw) companies (Magnum, Berjaya Sports Toto, Damacai/Pan Malaysian Pools) that focus on a specific gambling market, and as regulated under the Racing (Totalisator Board) Act (1961).

There’re also outlets such as snooker clubs which can double up as a haven for illegal/”underground” betting activities.

Nowadays, online gambling/gaming has become popularised (which saw a spike during the movement control order/MCO periods) ranging from sports betting (e.g., football/soccer, horse race) to options trading (stock market). Its legality remains a “grey area” as successive governments seem to lack the urgency to update the law – Common Gaming Houses Act (1953) and Betting Act (1953) – to accommodate and take into account contemporaneous developments. The High Court in Public Prosecutor v Multi Electrical Supply & Services & 105 Others [2022] confirmed that online gambling remained a “grey area” which required the correct legislative tools to empower the authorities to regulate the activities (“Does the House Always Win? An analysis of civil forfeiture of property for the offence of “online gambling”, Skrine, May 25, 2022).

By way of digression, it’s hoped that the government would expedite the legislative and policy-making process – to regulate and tax online gambling (as a new source of revenue).

In the UK, for example, the existence and presence of fixed odds betting terminals (FOBTs) combines the OSC characteristics of a casino with the specialisation/speciality of an NFO/NFT outlet. That is, the various gambling activities are all consolidated in the form of a FOBT machine as provided for in betting shops.

And then there’re the gambling dens which more often than not are situated in residential premises.

Back to the issue of casino.

Casinos serve as a gateway to advanced types of gambling like blackjack, roulette, baccarat and craps which are more “suitable” as and commensurate with being part of rest and recreational activities (R&R), i.e., advanced forms of leisure. Hence, it’s not surprising that casinos are typically part of a resort or hotel and dubbed a (legitimate) tourism activity (because of a captive market “out there”).   

By extension, earnings generated from casinos can be seen to be a lucrative source of government revenue whereby the so-called “inelasticity” of the demand provides an incentive for increasing the sin tax.

Notwithstanding, it’s highly disconcerting that the Sarawak territorial/state government via Tourism, Creative Industry and Performing Arts Minister Datuk Seri Abdul Karim Rahman Hamzah is keen on setting up a casino as part of the redevelopment of the Borneo Highlands Resort (“Making Sarawak more appealing to foreign, local tourists:, New Straits Times, April 8, 2023) – seemingly oblivious to the impact and “side-effects” such a plan would have on the local populace in the area and beyond (even if it goes ahead within a so-called “controlled environment”).

Undoubtedly, the Genting Highlands resorts casino story has been a success story. It’s not surprising that the Sarawak state government might want to replicate the model in East Malaysia. A casino (or casinos) could add to the revenue stream of the Sarawak state government and also generate employment for the locals as well as boosting the local economy – as tourism-crowd puller.

Genting Highlands Resorts City, which serves as the country’s integrated casino hub and operated by Resorts World Genting, has been a successful tourist and gambling attraction – pulling in locals and foreigners alike ever since its inception in 1971 by the late Tan Sri Lim Goh Tong who used to be a household name in both the corporate world and popular imagination (especially among the Malaysian Chinese community).

The Malaysian model whereby Genting Malaysia (GENM) is the sole casino operator and hence “monopoly” of the industry has worked very well – allowing for a controlled and well-regulated environment to flourish in co-existence with the reality that gambling is haram for the majority population. Muslims in Malaysia comprise nearly 60% of the population.  

Nonetheless, the critical issue under consideration in relation to the Sarawak context (and, by extension, Sabah) is whether the economic benefits (directly and indirectly) should “override” the moral and, by extension, social (moral) impact.

It’s argued regardless, the plan to set up a casino is a misguided policy move that’ll be detrimental to the well-being of Sarawakians, at least in the long-run.

Constructing a casino which is simply an add-on to the broader resort (re)development concept and plan will neither introduce a multiplier nor accelerator effect on the local economy.

Whatever multiplier effects there’d be come from the spill-over from the redevelopment of the Borneo Highlands Resort overall itself which at the same time is more than capable of generating any additional jobs (that is in lieu of the casino employment). Therefore, there’s no opportunity costs in foregoing the construction of a casino – job for job.

In fact, the casino industry in Malaysia as embodied by GENM is facing stiff competition from abroad.

Not only from Singapore but even Cambodia and the Philippines (“Genting may lose its status as casino king in Malaysia”, Eleven Media Group, July 19, 2019). It’s reported by JP Morgan Malaysia that “[d]ue to the impact of stiff competition in the [regional] market and government policy, Genting Group may lose its status as the casino king in the region, taken over by Philippines and Cambodia”.

The combined casino market size for Singapore and Malaysia was USD6.1 billion in 2018. On the other hand, the combined market size for Cambodia and the Philippines were at a close of USD5 billion. By 2020 and 2021, Genting’s casino business in Malaysia and Singapore was estimated to be at USD5.7 billion while the size for Cambodia and Philippines increased “to between USD6.7 billion and USD7.5 billion”.   

Cambodia has recently attracted a large segment of Malaysia tourists, partly due to its “emerging” status as a leading gambling/gaming hub.

The robust expansion and growth of the casino industry in Cambodia is also definitively attributable to the laxer or less restrictive/controlled policy environment compared to Malaysia where, e.g., GNEM’s licensing application has to be submitted anew every three months (“Cambodia poses a growing threat to Malaysia’s gaming industry, says JPMorgan”, The Malaysian Reserve, July 17, 2019).

According to JP Morgan Malaysia, Malaysian visitors to Cambodia have increased by a third between 2017 and 2019 and they’re believed to be the second-largest contributors of gross gaming revenue (GGR) in some of the larger casinos there. JP Morgan Malaysia also reported that prominent Cambodian casino operator NagaCorp Ltd reported 29% to 45% higher volumes year-on-year in the first quarter of 2019 versus a double-digit decline in rolling volume for GNEM – and, by extension, fast forward into the present-day.

Given this, it’s simply not feasible, economically speaking, to set up another casino in the country even if across the South China Sea. A casino at Borneo Highlands Resort would simply not be able to serve as a viable alternative casino site/location, either domestically or regionally.

And even though the majority of Sarawakians are non-Muslim, the Muslim population in Kuching itself is at least slightly more than a third.

Given Kuching’s position and status, it’s simply not suitable to offer up the capital city of Sarawak as another casino avenue for local/domestic and regional as well as international tourists, especially gamblers.

For example, Kuching’s night life and shopping scene aren’t comparable to Genting Highlands’s.

The type of tourists flocking to Sarawak would generally be oriented towards culture, adventure, nature, food, and festival (CANFF) tourism (as articulated by the Sarawak Tourism Board). Cultural tourism includes heritage and community tourism – whereby visitors are exposed to the lifestyle of the various sub-ethnic groups in the territory such as the Lun Bwang, for example.

Promoting the casino industry under Sarawak’s tourism umbrella wouldn’t only be jarring but financially not cost-effective. Much financial resources would have to be expended in promoting and advertising Borneo Highlands Resort’s casino in the country and beyond – in order to generate the expected returns.

The net present value (NPV) of the cash flows simply doesn’t justify the investment – given that the present value (PV) of the expenditure for (re)development and construction (outflows) wouldn’t be met over and above (recouped plus profit) by future earnings (inflows) due to insufficient demand and the size of the expected market.

Even if the proposal and conceptualisation (e.g., floor plan, arrangement of the gambling assets) is for a casino that’s much more modest and smaller in size (and hence, again, isn’t meant to rival Genting Highlands) and concentrated almost exclusively on the slot machines, the morality far outweighs the economic benefits.

Firstly, what’s there to prevent the slot machines from assuming the function of a FBOT?

This would simply transfer the physicality of the centrepiece of gambling attraction as embodied by the excitement of interpersonal interaction in the casino table games to the virtual (e.g., artificial intelligence or AI).

Secondly, and following on from that, it’s noted that Sarawak is majority Christian and gambling (in contradistinction with playing purely for leisure) is also forbidden/off-limits for the adherents too.

In this, Christians in Sarawak, and indeed in the rest of the country, would be thankful to Islamist party PAS for stating its avowed opposition to the proposal (“PAS Sarawak stands opposed to idea of opening casinos in state”, Borneo Post, April 20, 2023).

PAS Sarawak commissioner Jofri Jaraiee said that “[t]he proposed opening of [a casino or casinos] should be opposed as it would do more harm than good to the people … if realised, [it] could lead to gambling addiction and the eventual collapse of the family institution and also society”.

He further added that “[s]uch consequences outweigh the economic returns premised on casinos being a major stimulus for tourism development, by way of attracting both domestic and international tourists”.

It’s hoped that the Anglican Diocese of Kuching, the Catholic Archdiocese of Kuching, Association of Churches Sarawak (ACS), Sarawak Evangelical Christian Association (SECA), Sidang Injil Borneo (SIB), etc. together with the Sarawak Islamic Council (Majlis Islam Sarawak) would finally join in explicitly/expressly stating their opposition too.

Which then brings us to the third point, namely that the socio-economic development of the locals would also hardly be enhanced. Instead, the existence and presence of a casino might just introduce further exposure to illegal and organised criminal activities such as prostitution, loan sharking and extortion rackets.

Lastly, it’s arguable that having another casino in Malaysia is simply not in line with the Malaysia Madani agenda where the expression of liberal attitudes and values are channelled within the constraints and framework of a broad consensus involving dynamic interactions with a conservative worldview to produce moderate pathways.

In conclusion, Sarawak’s liberal outlook is better displayed in other ways such as ramping up on its CANFF distinctiveness and positioning the territory as the leading advocate of a multi-cultural Malaysia domestically and overseas politically and policy-wise.

Please don’t set up a casino in Sarawak.

Jason Loh Seong Wei is Head of Social, Law & Human Rights at EMIR Research, an independent think tank focussed on strategic policy recommendations based on rigorous research.

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