Thailand’s government will withdraw a controversial bill to legalize casinos during the current parliamentary session as growing political instability and public resistance erode support within the ruling coalition.

Chief Government Whip Visuth Chainaroon revealed on Monday that a motion to formally remove the casino bill from the legislative agenda will be introduced on Wednesday — the day the bill was due to be introduced to parliament, Bloomberg reported.

The bill, which seeks to legalise casino operations as part of an integrated entertainment resort, was set to be a key topic for discussion when the House of Representatives resumed last week. However, the government had previously hinted that it would delay tabled the bill, citing the need for further public consultation and efforts to address widespread concerns about problem gambling and potential money laundering risks.

The government's decision to fully withdraw the bill comes amid a deepening political crisis that has weakened the ruling coalition, which recently lost the support of its key partner in opposing the bill, the Bhumjaithai Party, and is grappling with the suspension of Prime Minister Paetongtarn Shinawatra over allegations of ethical misconduct.

Ms. Petunthan is also facing additional legal scrutiny after a leaked phone call with former Cambodian leader Hun Sen in which she appeared to criticize the Thai military’s role in the border dispute, raising political tensions and further undermining her leadership at a time when unity within the alliance is uncertain.

With its parliamentary majority shrinking, the government is expected to face increasing difficulties not only in advancing controversial proposals such as casino legalization, but also in advancing some important measures. Lawmakers plan to hold the second and third readings of the national budget bill for the next fiscal year, which begins in October, in August.

The shelving of the casino bill highlights the fragility of Thailand’s current political environment and suggests that legislative efforts that require broad consensus could be delayed or shelved in the coming months.

Notably, major international operators such as Wynn Resorts and MGM Resorts have already entered into talks with the authorities regarding future entertainment complex projects in the country.

The Thai government argues that legalizing casino operations as part of a wider integrated entertainment complex could bring huge economic benefits to the country. Supporters of the bill, including members of a House of Representatives committee studying the feasibility of such projects, estimate that Thailand could generate up to 400 billion baht (US$11 billion) in gross gaming revenue (GGR) per year if casinos were legalized and properly regulated. 

Modeled on developments in places like Singapore and Macau, the entertainment complexes are expected to attract billions of dollars in investment from domestic and foreign operators, which the government believes will stimulate tourism, improve infrastructure and boost regional development.

In addition to raising revenue, the plan is expected to create a large number of jobs. Thai politicians, including former Prime Minister Thaksin Shinawatra, have estimated that each complex could create 10,000 to 20,000 direct jobs and tens of thousands more indirectly through supporting industries such as hotels, retail, construction and transportation.

One of the reasons given by the government is that regulating and taxing gaming activities will help combat illegal gambling, which currently operates in secret and deprives the state of potential revenue. Revenue from legal casinos could also be used for public welfare projects and national development plans.