Are casinos the right path to riches?

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Casinos have been controversial in Mongolia since the late 1990s, after the authors of the Law on Casinos went to jail in 1999. Parliament approved the Law on Casinos put forward by MPs S.Batchuluun, D.Enkhbaatar, and D.Battulga on January 15, 1998, but the MPs were accused of engaging in corruption during the tender process to select a company to carry out casino operations in Mongolia.

On April 10, 1999, immunity from prosecution for the three MPs was revoked, and Parliament repealed the law on January 22, 1999, banning casino operations. That is how the first attempt to open a casino in Mongolia failed.

In 2007, a new group of legislators put forward a proposal to establish legalized gambling, but rumors that the proposal was the result of lobbying from a foreign investment company resulted in opposition from Parliament, and the second attempt to open a casino was blocked.

A 2010 attempt to legalize gambling also met resistance, with the authors of a new casino law being accused of being the puppets of outside influences.

The fourth and most recent attempt to open casinos was made during the February 11, 2016, meeting of Cabinet. The Cabinet’s ministers approved a casino bill and voted to repeal the 1999 parliamentary ban on casinos in support of generating financial resources for the state and enhancing tourism. Parliament’s Standing Committee on Law approved the bill with a 78.6 percent vote in favor of the draft.

The bill specified that a license for carrying out casino operations for ten consecutive years would be sold for 35 billion MNT. The Minister of Environment, Green Development and Tourism emphasized last year that two licenses would be issued if the law was approved, and revenue of 74 billion to 138 billion MNT would be generated for the state each year.  Even though a law on casinos has not been approved yet, J.Erdenebat’s Cabinet has the same idea as their predecessors: opening casinos to deal with economic challenges.

Former Minister of Finance and economist MP D.Khayankhyrvaa said, “Mongolians have been debating casinos, but a number of countries throughout the world have legalized casinos. If a casino can benefit economic development, we should kick it off soon, but there should be legal sanctions, such as only serving foreigners and setting an age limit for gambling.”

MP O.Baasankhuu, a lawyer, pointed out that he opposes a law on casinos because casinos are always connected to money laundering, drug trafficking, and other illegal enterprises. He added that taking control of adhering to the law, making sure that foreigners and Mongolians are not engaging in illegal activities, and addressing illegal operations will cost a lot of money.

Former Minister for Construction and Urban Development D.Tsogtbaatar, now a diplomat, noted that opening a casino to make more money to deal with economic challenges is ridiculous, because money coming from casinos is nothing compared to mining megaproject profits. He also said businesses like casinos always face a lot of challenges to keep business on track.

Deputy Director of MonMacau, L.Baigal, who went to jail with three MPs in 1999, said that soccer and basketball have been linked to gambling, but when it comes to casinos, people are afraid, and politicians who nothing invested in opening a casino encourage resistance.

Chairman of the National Policy Agency of Mongolia R.Chinggis pointed out that laws and regulations on legal enforcement should be improved, and that Mongolia is collaborating with international organizations to fight money laundering and terrorism.

President of Naran Trade Group S.Boldkhet, a businessman and former MP, said that the most important thing is transparent tenders for licenses and contracted business, and the state has to focus on organizing tenders clearly. He added that Zamiin Uud checkpoint at the Chinese border and Altanbulag checkpoint along the Russian border are the best locations for casinos. Myanmar and Laos have built casino hotels along the Chinese border, and they are known to bring Chinese gamblers with a lot of money into their countries.

People know that there are conflicts of interest when legislators block each other on casino legislation. Some people say that high taxes on customers will help minimize illegal activity and keep economically vulnerable gamblers away. They imagine that if taxes are high, only rich people will go to casinos, so it would be possible to make money without focusing on bringing in crowds, but this strategy is risky.

Mongolia wants to open casino hotels at border checkpoints, so the state needs to be prepared for a lot of money being spent on infrastructure at these places along the border. Casino developers won’t want to invest too much in construction without the state offering tax exemption and infrastructure investment.

On the other hand, Mongolia is a small country with two neighbors facing money laundering, drug trafficking, and other challenges, so we need to be careful about opening casinos. If illegal activities such as money laundering and drug trafficking begin sprouting up in a small country with a population of only three million people, it will threaten our national security.

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