Thailand’s plans to legalize online gambling are raising fears that criminal gangs will use the industry to move and launder their illicit proceeds as they have done with gambling operators in neighboring countries.
Prasert Jantararuangtong, Thailand’s minister of digital economy and society, said last week that a bill could be ready within a month. Former Prime Minister Thaksin Shinawatra, widely seen as a major force behind the current government, led by his daughter Paetongtarn Shinawatra, avidly endorsed the idea as well last week.
The averred impetus for the push has been both economic and legal.
Thaksin claimed a regulated online gambling industry could net the government nearly $3 billion in annual revenue. By bringing an industry already operating in the shadows into the light, Prasert said the move could also drive out the criminals currently behind many of the betting sites.
“The goal is to regulate underground gambling operations, bringing them into the legal framework and ensuring proper taxation,” Prasert told reporters.
The push for online gambling is moving ahead as the government is preparing to legalize physical casinos inside integrated resorts featuring hotels, shopping malls and other entertainment. A related bill is due for debate in the National Assembly soon, after winning approval from the prime minister’s Cabinet on Monday.
Gambling in Thailand is currently restricted to betting on state-run horse races and an official lottery.
Many have been warning that expanding the scope of legal gambling in Thailand, especially online, is rife with risk.
Bringing underground gambling operations under government regulation can do some good, Benedikt Hofmann, deputy representative for Southeast Asia and the Pacific for the United Nations Office on Drugs and Crime, told VOA.
“But it also opens the door for ostensibly legitimate investments and use of the system by criminal actors for their illicit purposes, especially in a region rife with such actors. As we have seen in the Philippines, creating legal licensing and regulatory frameworks for gambling operators, like the POGO scheme, did not prevent the system from being taken over by highly problematic actors,” he said.
The Philippines launched POGO, the Philippines Offshore Gaming Operator, in 2016 to license online gambling operators, but shut down the program last year. In a state of the nation address in July, President Ferdinand Marcos Jr. said the industry had morphed into a hotbed of cyberscamming, money laundering and human trafficking.
Hofmann said online gambling sites often spring up from physical casinos and can turbocharge their criminal activities.
“Taking advantage of the online space, these operations function around the clock and are theoretically accessible from anywhere in the world, so the reach and volume of both licit and illicit funds processed are much larger. They also offer easier ways to integrate crypto transactions and reduce customer touchpoints, making them highly attractive for money laundering,” he said.
In a 2023 report, the UNODC said Southeast Asia’s transnational crime syndicates had effectively turned the region’s casinos and online betting sites into their own shadow banking network, using them to move and launder tens, if not hundreds, of billions of dollars a year in earnings from illegal gambling, drug trafficking, cyberscams and other organized crime.
Besides the Philippines, many of those casinos and betting sites operate just across the border from Thailand in Cambodia, Laos and Myanmar.
Amanda Gore, director of the Center for Global Advancement and a forensic accountant who has investigated financial crime around the world, said Thailand’s neighborhood puts the country at high risk of having its own online gambling industry exploited.
“Because they’ve got the same sort of geographical issues … the drug trafficking, the organized crime; it’s all in that area. So, they’re going to have to be extremely strict, and if they’re not then it’s probably going to end up going the same way as the Philippines,” she told VOA.
Gore said the operators behind these online gambling sites often move from jurisdiction to jurisdiction in search of the most permissive conditions, and warned that some of those recently shut out of the Philippines could look to Thailand next unless it passes strong laws and backs them up with strict enforcement.
“The key is going to be whether they have a strong enforcement presence behind those regulations and laws as well, because if they don’t, I think it’s going to be very, very vulnerable to the criminal groups in the region, particularly from the money laundering perspective,” she said.
Government officials have said they are aware of the risks and insisted they would only roll out the casinos and online gambling licenses with the necessary guardrails, but they have yet to provide any details.
Spokespersons for the prime minister’s office and the ministries of interior and digital economy and society did not reply to VOA’s requests for elaboration.
Rangsiman Rome, an opposition lawmaker in Thailand’s House of Representatives who chairs the committee on national security, told VOA that he supports the legalization of casinos and a limited online gambling industry in principle but believes the government is not yet up to the task of managing either safely.
“The current law, including law enforcement, is not enough to protect Thai society from the gray capital, the mafia or … money laundering,” he said. “Because now the money laundering already happens, it happens every day, and it looks like the Thai authorities don’t know how to stop this.”
Rangsiman said the government should give itself, lawmakers and the public more time to study and debate the pros and cons before pressing ahead, and that it should focus on rooting out the corruption in the agencies that would be tasked with enforcing any new laws on casinos and gambling first.
Thailand has arrested dozens of police officers for running or protecting underground gambling operations in recent years.
“We see a lot of corruption that happens in Thailand, so we have to fix this before we allow the casinos,” Rangsiman said.
Gore suggested Thailand study well-established gambling commissions such as the United Kingdom’s, which she said could offer useful lessons on how to sanction operators that fail to follow the rules.
The UNODC’s Hofmann said Thailand should also focus on making sure its regulators carefully vet casino investors and players, and consider foregoing online gambling and cryptocurrency payments altogether.
“Even then, risks will remain,” he said, “as we have seen with organized crime infiltrating casino sectors around the world.”
