Casino Registration in Nepal - Prime Law Associates

Casino registration in Nepal refers to the legal process of obtaining approval, licensing, and authorization from the Government of Nepal. This involves meeting specific requirements under the Casino Regulation, 2082B.S. and related tourism and business laws, including minimum capital, licensing fees, hotel partnerships, operational standards, and compliance with tax and anti-gambling laws.

Casino Business Registration in Nepal

Casino business registration in Nepal refers to the formal process of securing legal permission to operate a casino within the country. This involves registering the enterprise with the appropriate government agencies and obtaining all required licenses and approvals. Governed primarily by the Casino Regulation, 2082, the process ensures that casino operations align with national laws and regulatory standards. Registration is compulsory for any individual or organization planning to establish and run a casino whether as a dedicated venue or in partnership with a hotel. The primary goals of this regulatory framework are to control and oversee the gambling industry, curb illegal operations, and contribute to government revenue through licensing fees and taxation.

Law governing Casino Business Registration in Nepal

Several laws governing Casino Business Registration in Nepal:

Casino Regulation 2082: Primary legislation for casino operations
Tourism Act 2035 (1978): Regulates tourism-related businesses
Companies Act 2063 (2006): Governs company registration and operations
Foreign Investment and Technology Transfer Act 2075 (2019): Regulates foreign investment
Industrial Enterprises Act 2076 (2020): Provides framework for industrial operations
Labor Act 2074 (2017): Governs employment practices
Income Tax Act 2058 (2002): Regulates taxation of casino businesses
Value Added Tax Act 2052 (1996): Governs VAT application on casino services
Asset (Money) Laundering Prevention Act 2064 (2008): Ensures financial compliance
Nepal Rastra Bank Act 2058 (2002): Regulates financial aspects of casino operations

These laws collectively form the legal framework for casino operations in Nepal, ensuring compliance, fair practices, and revenue generation for the government.

Government Authorities involved in casino registration in Nepal

Several government authorities are involved in the Casino Business Registration process in Nepal:

Department of Tourism: Primary regulatory body for casinos
Ministry of Culture, Tourism and Civil Aviation: Issues casino licenses
Company Registrar’s Office: Handles company registration
Nepal Rastra Bank: Oversees financial compliance
Inland Revenue Department: Manages tax registration and collection

Process of Casino Registration in Nepal

Required Paid-Up Capital to Operate a Casino in Nepal

As per Casino Regulation, 2082, anyone intending to establish a company for casino operation under this Act must maintain the following minimum paid-up capital at the time of incorporation:

For a large casino: At least NPR 300 million (thirty crore rupees)
For a small casino: At least NPR 200 million (twenty crore rupees)

“Large Casino” refers to a casino that offers both types of games: those conducted manually using cards, chips, or coins with the help of a dealer or spinner by physically operating machines, and those conducted through modern machines or electronic devices.

“Small Casino” means a casino where games are operated exclusively through modern machines or electronic devices.

Companies already operating casinos with valid licenses under previous laws must also meet this capital requirement by the end of Chaitra, 2085 B.S. if they have not already done so.

Pre-Approval Requirement for Casino Operation

As per the Casino Regulation, 2082, any individual or entity seeking pre-approval to operate a casino must submit an application to the Department of Tourism using the format prescribed in Schedule-1. The application must include a fee of NPR 10,000 along with the following documents:

A written consent letter from a four-star or higher-rated hotel or resort allowing casino operations within its premises.
The Memorandum and Articles of Association of the proposed company.
Details of shares agreed to be taken by each director, including the number of shares and corresponding investment amount.
Copies of citizenship certificates, passports, or national identity cards of each proposed director, along with their personal details and a self-declaration confirming the absence of
disqualifying circumstances
A feasibility study report in the format provided in Schedule-2.
A financial and technical proposal as per Schedule-3.
If the casino is to be operated within five kilometers of an international border, the applicant must submit:
A recommendation from the District Security Committee based on a security assessment.
A security plan and proof of deploying at least 20 trained security personnel at the casino site.
Upon submission of all required documents and successful verification, the Department will issue a pre-approval in the format prescribed in Schedule-4, specifying conditions and infrastructure requirements for starting the casino operation.

Circumstances under which pre-Approval shall not be granted

Notwithstanding anything mentioned in the act, The Department of Tourism shall not grant pre-approval to establish a casino-operating company under the following circumstances:

Notwithstanding anything mentioned in the act, The Department of Tourism shall not grant pre-approval to establish a casino-operating company under the following circumstances:
If any of the disqualifying conditions mentioned under Section 45 of the Tourism Act are present.
If any proposed director of the company is under the age of 18.
If the proposed company does not meet the minimum paid-up capital requirement as per Rule 3, or fails to submit the application fee, documents, or details as required under Sub-rule (1) of Rule
If more than one casino is proposed to operate within the same hotel or resort premises.
If the proposed casino location is within five kilometres of an international border and the applicant fails to meet the security standards required

Licensing and Renewal

Requirements on Infrastructure and Fitness (Fit & Proper Test)

Before applying for a casino license, the company that has obtained pre-approval from the Department must fulfill the following infrastructure and fitness requirements:

Must have electronic surveillance systems to prevent theft and fraud.
A system for maintaining damage/loss records and internal/external controls.
Fire control system of at least 40 horsepower capacity.
CCTV storage of six months and a secure room for storing footage.
At least five trained security personnel for regular locations, and at least twenty for casinos within five kilometers of international borders.
Use of walk-through gates, metal detectors, ID scanning, and biometric access control systems (face, retina, or thumb scan).
Mechanisms for customer identification (KYC) and reporting per anti-money laundering laws.
Recommendation from the District Police Office for casino operations.
24/7 live CCTV feed of all games conducted within the casino.
Real-time digital entry records and counterfeit detection and counting machines.
Emergency evacuation systems and disaster response plans.
Ownership of at least five four-wheeled vehicles or agreement with a travel agency.
On-site health personnel for first aid and medical emergencies.
Arrangement for cultural programs and appropriate entertainment stages.
Casino layout and decorations per international standards with separate staff and player entry/exit pathways.
In addition, the associated hotel or resort must be at least four-star rated, meeting national hospitality standards.
Casinos within five kilometres of international borders must also meet enhanced security standards specified
The Department may conduct site inspections and monitoring before granting a license, and companies must apply for such inspections. If standards are not met, the Department may issue further directions or deny the license.

Applying for a License

Companies with pre-approval must apply for a casino license with a fee of NPR 1.5 million for large casinos and NPR 1 million for small casinos. The application must include:

Company registration documents, memorandum, and articles.
Proof of fee payment.
Ongoing consent from the four-star or higher hotel for casino operation.
Documentation showing compliance with Rules 6 of Casino Regulation 2082.
Any directives issued during inspections by the Department.
Authorization letter if a representative submits the application.
Foreign investment approval if a joint venture is involved.
The Department may conduct further inspections and issue a license only if all conditions are met. If deficiencies are found, the company will be asked to resolve them within a specified time.
License fees: NPR 30 million for large casinos and NPR 15 million for small ones, in addition to applicable royalties and bank guarantees (1.5x the royalty amount or a 14-month bank guarantee from a Class-A commercial bank).

License Renewal

For license renewal, the company must submit the following:
Proof of royalty payments.
Bank guarantee equivalent to 1.5 times the annual royalty.
Audited financial report of the previous fiscal year.
Updated details of directors and shareholders.
Tax clearance certificate.
Evidence of tax deductions deposited from customers and staff.
Details of corporate social responsibility expenses.
Updated hotel/resort registration documents.
Renewal Fees: NPR 15 million for large casinos and NPR 7.5 million for small casinos.
For companies operating multiple casinos, the above fees and guarantees apply to each casino separately.
If the casino is operating in a compliant hotel/resort and applies at least 30 days before license expiry, the license can be renewed under these rules. However, renewal will not be granted if:
The casino is found offering unauthorized games.
The hotel or resort is suspended, downgraded, or de-registered.

License Cancellation

Before canceling a license under this Act, the Department must publish a public notice and allow seven days for the licensee to submit an explanation. If the explanation is not satisfactory or not submitted, the Department may cancel the license.

A company may also apply for cancellation by settling all dues (royalty, fees, penalties, etc.). Upon cancellation, the Department must notify the Company Registrar, Internal Revenue Office, and Industry Department.

Rules and Conditions for Operating a Casino in Nepal

The Casino Regulation, 2082 B.S., outlines various operational rules, security conditions, location requirements, and ethical standards that a company must follow while operating a casino in Nepal. Some of the key provisions are:

Single Casino Limitation: Companies operating more than one casino at the time of this regulation must apply to operate only one casino by the end of Ashad, 2082 B.S this Act.
Security Requirements: Every casino must install a surveillance system approved by the Department, with clear facial visibility of all entrants. CCTV footage must be preserved for at least six months.
Prohibited Acts: Casinos must not allow immoral, unethical, or criminal activities. Lending money or offering credit to gamblers is strictly prohibited.
Ethical Standards: Operations must respect Nepali culture, tradition, and social values, and games promoting unethical conduct are not permitted.
Anti-Money Laundering Compliance: Casinos must comply with existing money laundering laws and submit reports as required.
Location Restrictions: A casino cannot operate within five kilometers of an international border unless it meets specific security criteria. Casinos operating within three kilometers before the regulation may continue only if they comply with all updated requirements by the end of Chaitra, 2083 B.S.
Relocation Permission: Licensed casinos may request to change their hotel or resort location but must choose a four-star or higher facility and meet all legal standards to obtain departmental approval.
Employment Quotas: A large casino must employ at least 150 Nepali citizens, and a small casino must employ at least 50.
No Online Gaming: Operating or promoting online gambling games is prohibited.
Advertising Ban: Promotion through any media (print, digital, audiovisual, etc.) inside Nepal is strictly prohibited.
Food and Beverage Quality: The casino must regularly test water, beverages, and food provided to players through an authorized quality control agency.
Cultural Promotion: The casino is expected to promote Nepali cuisine and operate only within the licensed resort premises.
Compliance and Monitoring: All instructions from the Department and Financial Information Unit must be followed. Casinos must cooperate with inspections and submit any requested documentation.

Joint Venture with Foreign Company and Foreign Currency Transactions for Casino Operations

A company that has obtained a casino operating license may operate a casino in joint venture with a foreign company, provided that it obtains the approval of the Ministry based on the recommendation of the Department.
While entering into a joint venture with a foreign company under sub-rule (1), the company must comply with the prevailing laws related to foreign investment.
If the casino operation requires transactions in foreign currency, the licensed company must obtain permission from Nepal Rastra Bank in accordance with prevailing laws to carry out such foreign currency transactions.

Conclusion:

The process of registering and operating a casino business in Nepal is governed by a strong legal and regulatory framework. From company incorporation to license issuance and renewal, operators must undergo extensive evaluations to ensure compliance with financial, legal and technical standards. The Casino Regulation, 2082 B.S., along with supporting legislation such as the Tourism Act, Companies Act, and Anti-Money Laundering laws, collectively serve to authorize only credible and capable entities to operate in this sector.

In essence, Nepal’s regulatory framework for casino registration aims not only to boost government revenue and attract foreign and domestic investment but also to prevent illicit activities and support the sustainable growth of the tourism and hospitality sectors. For potential investors and operators, a clear understanding and full compliance with these regulations are vital for lawful and successful casino operations in Nepal.