A Looming Shadow: Online Gambling Crime In Thailand And The Casino Campaign

December 4, 2024
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In this Forensic Explainer, Vixio GamblingCompliance summarises the latest developments in online gambling policy and enforcement in Thailand, and discusses potential headwinds for integrated resort casinos that might flow from imperfect attempts to seal governance wounds opened by thousands of trafficking victims and an ebbing of public trust.
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Legal casino gambling in Thailand is at its closest point in generations, with the country’s Cabinet set to approve a draft bill for parliament and passage likely by mid-2025.

Global casino operators are now sufficiently confident in legislative progress that potential licence applicants are openly commenting on their plans for a regulated Thai market.

Sell-side analysts, meanwhile, are reprising the enthusiasm they showed for Japan before Tokyo’s casino licence application process went south. They predict hefty returns from a maximum seven IRs that could surpass Singapore and the Philippines, and place Thailand only behind Macau in terms of revenue.

With this optimism come the industry conferences and networking events. This week, Bangkok will host the Thai Entertainment Complex Summit, the largest such conference to date in Thailand focusing on hoped-for integrated resorts (IRs).

The growing excitement recalls industry anticipation for government-backed expansion of the South Korean market, and the birth of its Japanese rival.

Both of those campaigns delivered well under expectations, with almost all major gambling companies withdrawing their bids as projected returns withered under unpredictable political environments and stubborn government positions on local gambler access, taxes and other costs.

But Thailand does not have the same problems as its Asian rivals.

The draft legislation due within weeks will not emulate Korea in blocking locals from gambling, and Thailand is not subject to the same disorientating degree of central government fastidiousness and regional government vetoes as Japan.

Thailand’s natural conservatism toward gambling in a majority Buddhist society is offset by economic pragmatism, derived in part from decades of foreign tourism earnings.

The threats to the casino project in Thailand lie elsewhere. 

The only Southeast Asian nation to avoid colonisation, Thailand nonetheless is politically unstable, with steep, regionally marked class divisions steering the nation between fitful displays of democracy and military intervention, all under the gaze of partisan courts and an increasingly erratic royal family.

Because of these political structures and its vast hinterlands bordering lawless regions, war zones and authoritarian nations, Thailand is also susceptible to corruption and foreign interference.

Most of this is known to the gambling industry today. What is new in Thailand’s context, in tandem with years of campaigning for a land-based industry, is the rise of illegal online gambling.

This vast counterpoint to the Thai push for casino respectability comes in two problematic forms for the government and the public: 

(a) The online gambling of Thais at home.

(b) Thailand’s role as a conduit for trafficking of workers, Thai and foreign, to cyber-scamming and online gambling compounds built on slave labour elsewhere in Southeast Asia.

In this Forensic Explainer, Vixio GamblingCompliance summarises the latest developments in online gambling policy and enforcement, and discusses potential headwinds for IRs that might flow from imperfect attempts to seal governance wounds opened by thousands of trafficking victims and an ebbing of public trust.

Cabinet Conviction

The Thai Cabinet in October indicated it will proceed with recommendations from the National Anti-Corruption Commission to greatly enhance enforcement, education and inter-agency cooperation to combat online gambling.

The Ministry of Digital Economy and Society will helm the campaign and it will be steered by a national committee of law enforcement and departmental heads, fiscal and anti-money laundering officials, policy, technology and cybersecurity specialists and other experts, with a sitting minister to serve as chairman.

The committee’s duties will include compliance oversight, policy development and legislative reform, international liaison work and the coordination of a plethora of government organs with a view to stamping out online gambling.

Compliance changes will see greater disruption and prosecution of illegal activity, including Thailand-based online gambling operations, while public education campaigns will extend into mass and social media and community outreach and training.

The ministry is set to submit a streamlined strategy covering this complex ground to Cabinet for approval.

The vast majority of trafficking in Thailand involves transiting workers scammed into believing they are taking up legitimate information technology and other work before being shipped into guarded compounds over the border.

There the victims are physically forced to promote online gambling or take part in cyber-scam activity, violently punished if they refuse, and sometimes tortured and traded between syndicates.

Release often follows an extended period of unpaid work, the payment of a ransom or, less frequently, escape or rescue by local authorities. Some do not survive.

The US State Department View

Thailand’s troubles with online gambling and cyber-scamming trafficking are well documented and now a primary concern for governments with influence to bear and those whose citizens become victims.

The US State Department’s 2024 Trafficking in Persons Report for Thailand grades the nation as “Tier 2”, or failing to meet minimum standards for combating trafficking but attempting to achieve these standards.

This latest report confirms the increasing importance of Thailand to cyber-scamming operations and states that Thai authorities are failing its responsibilities, in many cases even compounding the mistreatment of victims.

“Authorities did not make sufficient efforts to identify and protect trafficking victims exploited in forced criminality in online scam operations in neighbouring countries, including Thai citizens and foreign nationals, often without legal status, who entered the country after their exploitation,” the report says.

Officials “did not identify the majority as trafficking victims, placed foreign victims in immigration detention centres, and arrested victims, including Thai citizens, for unlawful acts committed as a direct result of being trafficked in these illicit operations”.

Worse, “corruption and official complicity continued to impede anti-trafficking efforts, especially along the northern border [with Myanmar and Laos]”.

The report’s “prioritised recommendations” include prosecuting corrupt officials such as police and immigration officials, whose aid to traffickers has allowed the latter to “operate with impunity”; therefore, “increasingly utilising Thailand as a transit country to exploit victims in special economic zones (SEZs) and online scam operations in neighbouring countries”. 

It urged increasing efforts to “identify and protect trafficking victims exploited in neighbouring countries in forced labour in online scam operations arriving in or transiting Thailand” and reminded the Thai authorities that even its own nationals are trafficked into online scamming operations in Myanmar, Cambodia, Laos, Malaysia and the Philippines.

Myanmar Border Woes 

On the ground, previous efforts by the Thai government to disrupt the more notorious online gambling and scam operations along its border with Myanmar have had middling results, not least because of revolving pro-junta government militia and rebel ethnic militia that vie for control of these locations.

Much government and analyst attention in the last year has focused on the key Myanmar town of Myawaddy and its immediate environs, an area littered with scam operations under the protection of these militia.

Militia and junta warfare and Chinese government pressure mid-year have resulted in the expulsion of many of these operations, with the militia later warning of punishment for foreigners working in online compounds.

But a report in The Irrawaddy online newspaper confirmed in early October that largely Chinese-controlled online gambling and cyber-scamming syndicates have simply moved south from their base in Shwe Kokko near Myawaddy to the smaller border towns of Payathonzu, Kyauk Khet, Waw Lay and other locations.

In some places, syndicates are leasing land from a variety of pro-junta militia groups to run land-based casinos, further evidence of syndicate confidence in the medium-term returns of these areas.

In late October, an anti-trafficking group pleaded with Thailand’s Prime Minister to recover 110 people from nine countries trafficked into areas supposedly cleared of illegal operations.

And in mid-November, five Chinese tourists bound for Pattaya who were kidnapped by a syndicate were stopped by police before crossing the border into Myawaddy.

The most recent incident on November 25 saw 39 scam syndicate captives escape their compound and flee across the Moei River that separates Myawaddy from the Thai city of Mae Sot.

The Sri Lankan, Nepalese, Malaysian and Russian escapees from the notorious Tai Chang project were discovered cowering in the dark in a field by Thai soldiers before being released to immigration authorities. 

These incidents suggest that Myawaddy and Mae Sot remain transport hubs for trafficking despite reports of Myanmar militia crackdowns on underground activities, and suggest that Thailand will continue to play a crucial transit role for these operations.

Syndicates in Thailand

Even more concerning for the government, raids of online gambling and scam operations on Thai soil have continued unabated, although it is unclear if trafficked persons have been among those detained.

For example, in October, Pattaya police arrested 19 Chinese and a Cambodian in raids on three villas where the detained individuals solicited online gamblers and online loans.

Then, on November 10, a specialist police cyber unit arrested the alleged Chinese kingpin of a large scam facility in southern Thailand targeting victims across Thailand, China, Japan and Russia.

That group was broken up in March, when 90 suspects were arrested across four centres in the province of Nakhon Si Thammarat, also leading to the arrest of a local deputy mayor who owned property used by the gang. Further raids in the area in May implicated the deputy mayor’s family members.

In the latest crackdown, police on November 27 raided a Taiwanese-run online gambling operation in three locations in the city of Chiang Mai that was targeting China, Taiwan and Thailand, arresting six suspects.

But the most damaging optics for the government came with the August dismissal of the deputy head of the national police force, General Surachate “Big Joke” Hakparn, over alleged association with an online gambling syndicate and its websites, along with eight police officers connected to him.

A leading candidate to succeed the chief of police in September, Surachate claimed the dismissal was the result of factional intrigue, but Thailand’s top administrative court overwhelmingly confirmed his removal on November 13 amid ongoing investigation into the case.

Beware a land-based/online nexus

The US State Department, UN agencies and non-governmental organisations with expertise in Southeast Asia have clamoured for closer cooperation between the governments of Southeast Asia to resist an organic, rapidly evolving and highly adaptable criminal matrix of trafficking, slavery, advanced technology and scam artistry that rakes in tens of billions of dollars a year.

But what actions have taken place are still no match for what is happening in hundreds of criminal outposts in the key states of Myanmar, Cambodia and Laos.

Until something materially impacts this matrix, Thailand will be under pressure from its citizens and foreign governments to ramp enforcement against human traffickers and more modestly sized Thailand-based online gambling operations.

The formation of the coordinating committee under the Ministry of Digital Economy and Society goes some way to formalising the government’s response, but its initiatives are untested and its efficacy beyond existing enforcement unclear.

In the interim, the impact of uncontained online gambling crime in Thailand has the potentially positive outcome of encouraging the government to regulate online gambling, therefore raising considerable tax revenue while undercutting underground operations both within Thailand and those targeting Thailand from outside.

However, despite the occasional airing of such arguments and policy reforms, the driving message of the new online crackdown is punitive rather than persuasive, notwithstanding the public education campaign that has been promised.

This dark view of the online space continues to be reinforced by researchers and health professionals. Thailand’s Centre for Gambling Studies heard on Friday (November 29) at its annual conference in Bangkok that more than 4m Thais aged 19 to 25 are gambling, overwhelmingly online, out of a national population of 72m.

That leaves Thailand with a potentially expansive negative outcome from a flourishing underground online industry that could damage the prospects of the much sought-after land-based casinos. 

The spread of public, media and political hostility from online gambling and its criminal associations, real or perceived, to a nascent land-based casino sector already tasked with gentrifying its image is a real risk.

Evan Spytma, CEO of domestic-market-leading Philippine online gambling operator Casino Plus, told the Spice International gaming conference in Taipei on Friday (November 29) that the hostility of Thai officials toward online gambling is driven by the need to protect the future land-based industry — hinting at fears that the morass of illegal online gambling could weigh heavily on IR plans.

“The cleaning-up of the online space has been going on for a few years now, they’ve been raiding and attacking the largest operators in Thailand for about two years, putting the names of the operators on the news, their businesses, business permits,” Spytma said.

“So that’s been quite aggressive, and that’s all in preparation for that land-based initiative.”

Some Thai media outlets have expressed sharp scepticism over IRs on their own terms. The bestselling Nation daily, for example, sent reporters last month to the Inspire IR in South Korea.

They were dutifully impressed by the dazzling attractions on offer, but rather uninspired by what they described as a small volume of customers and gamblers and the dullness of the neighbourhood, and wondered how readily this problem might be replicated in Thailand.

It would not then take a large step for sceptical media and their readers to learn more about the nexus between land-based and online gambling companies, as well as the migratory legacy of this nexus in markets such as the Philippines.

For now, these questions are only questions.

But for IR proponents, Thailand’s tribulations with online gambling crime may be as great a potential risk to passage of legislation, as well as longer-term community acceptance and investor confidence, as the risk from wider governance instability.

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