Nepal’s Mini Casino Royalty Doubles: Who Pays the Price When the Government Needs Cash Fast

Key Points

• The Financial Bill of Nepal for 2026-27 will increase the yearly royalty of mini casinos from NPR 15 million to NPR 30 million, while the royalty for the full casino will be increased from NPR 50 million to NPR 55 million.
• The mini casinos business directly employs 4,500 to 5,000 individuals, while thousands of others are indirectly employed by the industry via hotels, transport, provision of food, and finance.
• The stakeholders from the industry state that the government losses due to royalty, value-added tax, income tax, and excise duty could easily exceed NPR 1.5 billion if operators leave the industry.

Nepal’s government has moved against its own casino industry through the Financial Bill for the 2026-27 fiscal year, hiking annual royalty fees across every tier of land-based gaming. Full casinos and mini electronic gaming venues both face steeper costs, with the changes sitting inside a wider budget push to lift state revenue.

Royalties Rise Across the Board, Mini Casinos Hit Hardest

Full casino licences now carry an annual royalty of NPR 55 million ($360,600), up from NPR 50 million ($327,800). Mini casinos, the electronic gaming machine venues that form the sector’s smaller tier, absorbed the sharper blow; their royalty was doubled outright, from NPR 15 million ($98,300) to NPR 30 million ($196,700).

Nepal’s land-based casinos sit almost entirely within hotels and resorts, and operate on a framework that bars Nepali citizens from the gaming floor entirely. Foreign visitors hold the only legal access, a restriction that has defined the industry’s commercial model since its origins.

“Without Studying Capacity”: Operators Say the Government Jumped Too Fast

Representatives of Nepal’s mini casino industry, speaking to local media Ratopati, said the royalty hike lands on top of an operating cost structure already under strain. Alcohol taxes have risen, employee wages have climbed, bank interest rates remain high, and electricity and technology upkeep eat further into margins.

The increase was brought in to raise government revenue; operators say that the narrow justification misses the compounding effect of costs closing in from multiple directions at once. One industry representative put it plainly: “The state needs revenue, which is natural. However, without studying the capacity of any industry, market conditions, return on investment, current state of tourism, and the overall impact of the employment generated by that industry, imposing such a large financial burden at once can be against the state’s own long-term interests.”

5,000 Jobs, and a Chain That Goes Much Further

Between 4,500 and 5,000 Nepalis work directly in land-based mini casinos according to industry estimates. Pull on that number and a much larger chain of livelihoods comes with it; hotel staff, restaurant workers, transport operators, security firms, cleaning contractors, food suppliers, IT providers, and banks all carry indirect exposure to the sector’s fortunes. The spatial location of Nepalese casinos, which are invariably located within the premises of hotels catering to foreign tourists, implies that the gaming industry has an inherent interest in the well-being of tourism. According to the Department of Tourism, the Nepalese government earned NPR 1.34 billion in royalties and other related fees in fiscal year 2023-24 from casinos. Operators say casinos bring in guests, extend stays, and pull foreign currency into Nepal’s hospitality economy. Private investment in hotels and resorts follows from that footfall, making casino viability and tourism infrastructure harder to separate than the royalty debate might suggest.

The Revenue Trap Hidden Inside the Hike

The royalty increase does not arrive in isolation. Nepal has spent the past two years tightening its casino framework; anti-money laundering requirements were strengthened, biometric entry systems brought in, KYC procedures sharpened, and capital requirements raised for operators. Each measure was introduced as part of a push to bring the industry into line with international oversight standards, as confirmed by SiGMA’s market reporting on Nepal’s regulatory reform trajectory.

Operators warn that the royalty alone could push some electronic gaming venues past the point of viability. Close enough mini casinos, and the government does not simply lose their royalty payments; it also loses the corporate income tax, VAT, and excise duties those businesses generate. Industry representatives put a figure on the worst case: more than NPR 1.5 billion ($9.8 million) in annual government revenue is gone if a significant number of operators leave the market.

A Sector That Has Survived Harder Tests, Until Now

This is not the first time Nepal’s casino industry has faced an existential pressure point. Casinos closed for 18 months due to Covid-19 before reopening in September 2021 with a one-year royalty waiver, a concession that acknowledged the sector’s fragility following the pandemic. That relief proved short-lived; by February 2022, the government cancelled casino licences at the Yak & Yeti Hotel and Dreamland Hotel after operators failed to clear royalty arrears, with the Yak & Yeti alone owing NPR 420 million. The enforcement action prompted a rush to clear dues, with the government collecting NPR 810 million in royalties following a ministerial directive, even as NPR 1.11 billion in arrears remained outstanding.

The pattern matters. Nepal’s casino sector has repeatedly cycled through crisis, partial recovery, and fresh regulatory pressure. Each round leaves fewer operators with the reserves to absorb the next shock.

Operators Want a Table, Not a Decree

Operators want the government in a room with them. Their task is a multi-stakeholder review pulling in hotel businesses, tourism experts, labour representatives, and relevant agencies to examine the royalty structure and the wider tax burden together. The budget measures land as Nepal is already mid-reform, with the proposed Integrated Tourism Bill carrying further changes to ownership rules and licensing requirements for land-based casinos, adding another layer of uncertainty to an industry already absorbing a heavy year.

Nepal’s gambling market was projected to grow at a 10.7% CAGR between 2020 and 2026, driven by tourism growth, hospitality investment, and rising foreign visitor numbers. Whether that trajectory survives a royalty structure that operators say makes the maths unworkable is the question the government has not yet answered.

Expert Analysis: When Revenue Strategy Becomes Revenue Risk

Nepal’s royalty increase carries a logic the government can defend on paper: higher fees, higher state income. The problem is that this reasoning holds only if operators stay open. A 100% hike on mini casino royalties, compounded by rising costs across every operational line, does not increase revenue from a shrinking industry; it accelerates the shrinkage. The NPR 1.5 billion annual loss estimate from industry representatives is not a lobbying number to be dismissed. It reflects what happens when royalty income, VAT, income tax, and excise duties all disappear together from businesses that can no longer trade. Nepal’s casino sector is small, concentrated, and structurally exposed; it sits entirely within hotels, depends entirely on foreign visitors, and has no domestic consumer base to fall back on. Governments that treat such sectors as revenue reservoirs rather than economic contributors tend to find the reservoir empties faster than the balance sheet predicted.