Inside Asian Gaming

13 response to that particular point. Poverty The social disharmony argument against gaming cannot, however, be ignored in a country where half the population earns less than US$1 per day. Using this World Bank measure, up to 75% of the 1.1 billion population can be classified as poor, says the social campaign group India Watch. Even using the government’s own guideline of Rs 30 per day (76 US cents) the country still has around half the population living below the poverty line. India’s position on casino gaming though finds echoes in other parts of Asia. Although Korea is well on its way to being a first world nation, it still bans its nationals from all but one of the country’s 17 casinos, and Vietnam restricts access to its establishments to foreigners or overseas Vietnamese. A paternalistic approach to casino licensingwas also seen in the United Kingdom and other western European countries until recently. Scratch the surface of the Indian casino debate however, and it seems the real battleground may be the power struggle between the individual states and the central government, and between India’s traditional economic protectionism and free trade,rather than between Hindu Puritanism and modernism. Independence In India the individual states do not have as much autonomy in fiscal or social policy matters as their counterparts in the United States. Nevada for example was able to swim against the tide of early 20th century American purity by legalising gambling as long ago as 1931. This was at a time when a U.S. federal ban on the sale of alcohol— known as prohibition—still had another two years to run. When the Indian state of Haryana proposed a casino in 2002, the outcome was very different. In September that year the Haryana State Industrial Development Corporation (HSIDC) signed a memorandum of understanding with Vista Star Leisure Limited, a UK based public company. It was for a Rs 2 billion (US$50.4 million) project with a 100-room hotel, swimming pool, health club and casino. The stategovernment already knewtherewas a federal ban on foreign direct investment in gambling-related activities but thought it could get round it by getting the foreign investor to set up an Indian subsidiary. The Haryana Casino (Licensing and Control) Bill, 2002, and the Public Gambling (Haryana Amendment) Bill, 2002, were eventually sent for presidential approval in early 2003.The paperwork then got shuffled around the corridors of Delhi until July 2005, when the country’s then president refused to sign it. That killed the legislation and at the time of going to press there was no sign of it being revived. Powers It’s not unusual for national governments to reserve for themselves decision-making rights over gaming because of social policy concerns. India’s disinclination though to devolve very much decision-making power to local level is also a legacy of the country’s history. A looser federal structure was recommended at the time of independence by a constitutional committee, but it was never adopted following the decision to partition the country and create for India’s Muslims separate states known at the time as West Pakistan and East Pakistan. The relevance of all this for the casino gaming industry 60 years later is that as parts of India get richer, the pressure to reform the historically lop-sided relationship between the centre and the states has been growing. It’s a familiar story seen in other places, with the richer parts of the country complaining they are being held back by the poorer parts. In India the specifics of the complaint are that relatively wealthy states make a disproportionate contribution to national earnings and the central tax pot, and get the least back for their money in terms of aid from the centre. If the rich states manage to claim more autonomy, then casinos could soon be back on the agenda. Elite Of three states—Goa, Haryana and Madhya Pradesh—recently identified in the Deutsche Bank report, “Casino expansion in India - Macau Part II?”, as having aspirations to develop land based gaming industries, two of them—Goa and Haryana—were also ranked first and second for state per capita economic output in 2004-05,themost recent year for which reliable figures are available, according to India’s CSO. Goa’s figures are though skewed by foreign currency earnings from its internationally famous tourism industry (in 2006, 3.3% of all tourists to India made a trip there). Goa is also tiny, both in land mass and population, which makes it much more manageable when it comes to things such as alleviating poverty and developing education and health services. One sided According to the research paper “Asymmetric Federalism in India”, states classified by the government as high income (in 2004-05 this meant above Rs 28,000 (US$707) per capita) account for only around 20% of the country’s area and population, but provide around a third of net productivity, known as the Net State Domestic Product (NDSP). The paper’s authors, M. Govinda Rao, Director of India’s National Institute of Public Finance and Policy, and Nirvikar Singh, Professor of Economics, University of California, Santa Cruz, also noted that low income states (in 2004-05, those with per capita productivity of below Rs 17,000 (US$429)) make up nearly half of India’s geographic area and population but account for less than a third of the NDSP. The limited ability of states to raise their own taxes and the high levels of personal tax avoidance in India keeps all states more or less dependent on the centre. Only Goa actually earns around a fifth more than it spends on its statutory responsibilities, making it a lot easier to bargain with central government on an issue such as gaming. Most middle and low-income states require subsidies from central government ranging anywhere between 40% and 90% to pay for their annual public spending. Haryana, though among the higher income elite, still requires a handout of around 20%. Licences Goa’s state government has indicated it may grant up to five newcasino boat licences (it originally indicated ten, but reduced the number after lobbying by groups opposed to the move). The new boats may be permanently or semi-permanently moored at a specially built quay. It’s possible to argue that Goa is a special case. It wasn’t even officially part of the country until 1961, when Portugal ceded control to Delhi after 450 years of occupation. Some Indians perceive it as a sort of racy and mildly unrespectable seaside playground best kept in a cultural isolation ward. The temptation to draw parallels between Goa and Macau in China