As Sri Lanka seeks to boost its gaming industry, the recent increase in casino licensing fees from Rs. 5 billion to Rs. 10 billion for a 20-year operation has left several investment proposals in limbo. Currently, around eight proposals are pending approval, with no updates from investors since the fee hike, raising concerns about the future of casino investments in the country.
Ministry of Finance Department of Fiscal Policy Director Darshana Wijesiriwardana said: “Six licences have already been issued, including the two new licences granted this year. However, the increase in fees has caused a noticeable pause in new applications.”
The Government hopes to balance revenue generation with the need for a thriving gaming sector, but the higher costs are proving to be a deterrent for potential investors.
For existing projects, the licensing fees have been adjusted according to new investment criteria.
“Operators now face a fee structure that includes payments of Rs. 500 million for the first five years and Rs. 1.5 billion for the subsequent 15 years, alongside an annual fee of approximately Rs. 500,000. With four owners currently operating under the six licences, the financial landscape for casino businesses is shifting,” Wijesiriwardana explained.
As reported, one of the newly approved ventures is a collaboration between Sri Lanka’s Golden Island Hospitality Ltd. and India’s Majestic Group Hotels and Casinos. This partnership will develop and operate the Majestic Pride Casino at the Colombo Lotus Tower.
On 1 August, the Ministry of Finance issued a casino business licence to the companies, and the joint venture subsequently signed an agreement with the Board of Investment (BOI). The companies have reportedly expressed their ambition to position Majestic Pride Casino as a premier tourist attraction, contributing to Sri Lanka’s tourism sector and economy while creating job opportunities for local youth in the gaming and hospitality industries.
Meanwhile, when contacted, BOI Director General Renuka Weerakoon said: “There are no new casino investment proposals pending from the BOI at this time. However, once the two recently approved projects receive their licences from the Finance Ministry, they will approach us with their investment plans.”
As learnt by The Sunday Morning, the current climate poses challenges for both new entrants and existing operators. Investors are weighing the implications of the increased fees against the potential returns of entering the Sri Lankan gaming market.
Legal framework
In Sri Lanka, gaming is regulated by several laws, including the Gaming Ordinance No.17 of 1889, the Casino Business (Regulation) Act No.17 of 2010, and the Betting and Gaming Levy No.40 of 1983.
Unlawful gaming, defined as activities such as cockfighting or gambling in public places, is prohibited under the Gaming Ordinance and punishable by fines and imprisonment. A ‘common gaming place’ refers to locations accessible to the public where gambling occurs.
The Betting and Gaming Levy imposes taxes on those conducting gaming businesses. Such businesses must register with the Inland Revenue Department.
According to the Casino Business (Regulation) Act No.17 of 2010, it is mandatory for anyone engaging in the casino business to hold a valid licence issued by the minister responsible for gaming. The minister is also responsible for designating specific areas where casinos can operate, meaning that the establishment of casinos is restricted to these pre-approved zones.
Operating a casino without a licence constitutes a serious offence under the act. Those found in violation face severe penalties, including imprisonment of up to five years, a fine of Rs. 5 million, or both.
The act ensures that the licensing process is carefully regulated, giving the minister authority to issue licences subject to specific terms and conditions. These conditions include regulations concerning the application process, fees, validity periods of licences, and the supervisory measures that may be required to ensure compliance.
Furthermore, the minister is empowered to introduce regulations to give effect to the act’s provisions, including those related to licensing procedures, the types of casino games allowed, and the cancellation of licences if necessary. All regulations must be published in the government gazette and subsequently approved by Parliament, ensuring oversight.
The law defines a ‘casino’ as any establishment where individuals can participate in games of chance for a stake, including popular games like baccarat, blackjack, poker, and roulette.
Evolution of legislation
Sri Lanka has a long history of gaming, with horse racing dating back to 1840. After independence, betting shops proliferated, taking wagers on horse and greyhound races, while in the 1990s, turf agents expanded to sports like cricket, football, and volleyball in a loosely regulated environment. Today, hundreds of betting shops operate across the country, alongside four full-service casinos.
In 2010, the Government sought to regulate the gaming industry as a means to boost tourism, particularly attracting regional visitors due to the country’s proximity to India.
Under President Mahinda Rajapaksa, the Casino Business Act was introduced, creating a legal framework to control and licence casinos, modernise betting shops, and establish tax rates. This move aimed to bring gaming regulations in line with international standards, positioning casino resorts as key drivers of tourism and hotel development.
However, political opposition to casino gambling grew, leading the Government to abandon plans for issuing new casino licences. Instead, existing licensees were allowed to transfer their licences to newly built large-scale casino hotels.
Major projects were planned, including a $ 400 million casino hotel in partnership with Crown Resorts and Ravi Wijeratne, and a separate $ 850 million casino resort by Dhammika Perera in collaboration with John Keells Holdings. Total investments in these developments exceeded $ 1.6 billion.
Despite these ambitious plans, political resistance intensified. In 2014, the Government imposed higher taxes on gaming, including a 40% tax on profits and an entry levy for local gamblers.
In 2015, President Maithripala Sirisena cancelled key tax incentives for the casino projects, prohibiting casinos in the new integrated resorts, although hotel and non-gaming developments were allowed to continue. As a result, Crown Resorts withdrew from the venture and other developments were scaled back significantly.
Nevertheless, President Ranil Wickremesinghe, in his capacity as the Minister of Finance, recently authorised the Casino Business (Regulation) Act No.17 of 2010, with the new regulations being referred to as the Casino Business Licensing Regulations No.1 of 2022.
This legislation establishes the application and renewal process for casino licences, outlines evaluation criteria for applications, and details the associated licence fees. It also addresses the conditions under which licences can be granted, cancelled, or surrendered, as well as the obligations of licence holders.
The Casino Business Licensing Regulations No.1 of 2022 have again been amended via a Government notification issued by President Wickremesinghe effective 1 January.
Under the revised regulations, applicants making a minimum investment of $ 250 million in integrated development will face a casino licence fee of Rs. 10 billion, with the same amount required for licence renewal.
For those investing at least $ 500 million, the initial licence fee is set at Rs. 5 billion, while the renewal fee remains Rs. 10 billion. Existing casino operators who obtained their licences before 1 January 2023 will be subject to a licence fee of Rs. 2 billion, structured as Rs. 500 million for the first five years and Rs. 1.5 billion for the following 15 years. The renewal fee for these operators is also Rs. 10 billion.
Future of casinos and gambling sector
Against such a backdrop, as reliably learnt by The Sunday Morning, the authorities have granted approval for two international casino operators from Macau and India to begin operations in the country, pending the issuance of licences under new regulations.
It is also learnt that the BOI facilitated discussions to bring these operators into the market. Once the operators obtain their gambling licences, they are expected to apply for BOI status, which would allow them to import building materials and gaming machines duty-free during the project’s tenure, provided they meet the required investment thresholds.
Nevertheless, the absence of a regulatory body to regulate the country’s casinos and gambling sector has existed for many decades. However, the Government announced plans in 2023 to establish the Casinos and Gambling Regulatory Authority to oversee the industry. The necessary legislation to establish this authority is reportedly nearing finalisation, with the Government planning to present it to Parliament soon.