Multimillion-dollar casinos planned for Colombo have boosted Sri Lanka’s ambitious hopes of becoming Asia’s new gambling hotspot, but the projects still face political and religious opposition.
Sri Lanka legalized gambling in November 2010, with the aim of eventually luring cashed-up tourists to the island nation and boosting an economy battered by decades of ethnic war.
The Sri Lankan government last week granted approval to John Keells Holdings PLC, the country’s biggest listed company in terms of market capitalization, for a US$850 million “mixed development” — a euphemism for an entertainment hub that includes gambling.
The green light was also given last month to the local partner of Australian billionaire and gaming tycoon James Packer for a similar deal to build a US$350 million lakeside resort in Colombo. Both investments have been given a generous 10-year tax holiday.
“Big names coming to Sri Lanka for mixed developments is a huge boost to the [tourism] industry,” said Chandra Mohotti, chairman of the state-run Sri Lanka Institute of Tourism and Hotel Management.
John Keells, a diversified group with interests in hotels, has not announced details, but industry officials say it will include a casino with a yet-to-be named foreign partner.
Packer’s Crown Group and John Keells are betting on Sri Lanka’s post-war economic growth and rising tourist numbers.
Sri Lankan officials have stressed that both projects, expected to start before the end of the year, will create thousands of jobs and attract high rollers.
Yet the main opposition party has balked at the projects, not on moral grounds, but because of the generous tax breaks.
“What we are saying is that if the country is to benefit, they must be taxed and regulated,” United National Party (UNP) lawmaker Harsha de Silva said. “We will not jump up and down saying we oppose casinos.”
The UNP is pushing for a sin-tax on casino developments in line with the heavy duties slapped on the alcohol and tobacco industries.
Sri Lankan Minister of Investment Promotion Lakshman Yapa Abeywardena defended the government’s efforts to encourage “mixed developments,” including with the 10-year tax holiday.
“If we don’t offer generous tax incentives, these investors will go to some other country,” Yapa said last week.
Small, low-key casinos have been tolerated in conservative mainly Buddhist Sri Lanka even before gambling was legalized in 2010, by exploiting several legal loopholes.
The government has been trying to placate the island’s influential monks by saying all future big-name casinos will be built in one designated zone in Colombo, and open only to foreigners.
Buddhist monk Athuraliye Rathana, a lawmaker and senior leader of the National Heritage Party, warned the government that these and other details set out in the 2010 gambling legislation must be strictly followed.
“We oppose gambling, but it is not practical to eradicate it completely. The government must enforce the Gambling Act [of 2010] and limit casinos to designated areas rather than give them a free run,” he told reporters.
“The government has at least said there will be a separate area for gambling. So let us see how they implement it,” said Galagodaatte Gnanasara, another Buddhist monk and secretary of the hardline Bodu Bala Sena, or Buddhist Power Force, organization.