News
Behind the glitz and glamour, lack of gaming laws with teeth looms large
View(s):- In its current form, the GRA Bill—if passed—will establish a non-independent regulator who serves as a proxy for the Minister of Finance
By Namini Wijedasa
Sri Lanka’s newest integrated resort with its international-grade casino was ceremonially launched on August 2, 2025, amidst red carpet glamour and overt political patronage at the highest levels.
The two nights of festivities and glitzy exuberance helped mask a serious shortcoming: the absence of a supervisory authority for casinos. The country’s regulatory environment for gaming is so rudimentary that even Melco Resorts & Entertainment—Asia’s leading casino operator—has voiced concerns in its 2024 annual report.
Melco’s worries
“…the regulatory framework governing casinos in Sri Lanka is comparatively limited, focusing on licence requirements, gaming tax obligations, and general anti-money laundering standards,” the report, released in March, states. “Although we have obtained the Sri Lanka Licence, there is considerable uncertainty about how the legal and regulatory environment may change in the near future.”
“Moreover, because the current regulatory framework remains limited, we have only partial visibility into how prospective laws or regulations such as those pertaining to responsible gaming, corporate governance, and anti-money laundering might be adopted or enforced by any future casino regulatory authority,” the report states.
“Additionally, if public opinion regarding casinos in Sri Lanka shifts or if policymakers adopt more restrictive views, we could encounter unforeseen challenges in maintaining our licence or expanding our operations,” it adds.
“Given these uncertainties, there can be no assurance that evolving regulations and attitudes towards gaming in Sri Lanka will not adversely affect our business, financial condition, and results of operations,” it concludes.
A namesake regulatory authority
Sri Lanka now has a draft Gambling Regulatory Authority Bill which, if passed, will repeal other laws related to gaming—the Betting on Horse-Racing Ordinance, the Gaming Ordinance and the Casino Business (Regulation) Act. Only the Betting and Gaming Levy Act will remain valid.
Separately, anti-money laundering and counter-terrorist financing regulations, particularly the Designated Non-Finance Business (Customer Due Diligence) Rules, No. 1 of 2018, impose requirements on casinos and gambling houses.
As Melco’s report points out, these rules mandate customer due diligence for transactions equal to or above US$3,000, including verifying customer identities and collecting detailed information. Enhanced due diligence is required for high-risk customers, such as politically exposed persons.
Casinos must appoint a senior management-level compliance officer to oversee anti-money laundering compliance, report suspicious transactions, and ensure adherence to record-keeping and reporting obligations.
“Non-compliance with these regulations can result in significant penalties and imposition of punitive regulatory measures,” Melco notes.
Not so significant, however, if recent examples are to be taken into account. Two local casinos—Bally’s Ltd and Bellagio Ltd—were fined just Rs. 1.5mn each by the Central Bank as administrative penalties for not adhering to the Financial Transactions Reporting Act, the rules, regulations and directives issued thereunder, and failing to obtain copies of identification documents from customers who established business relationships through their online platforms.
A mere slap on the wrist for these booming enterprises.
What is the plan?
It had been anticipated that the government would introduce the draft Gaming Regulatory Authority (GRA) Bill to Parliament before the opening of the new casino. It had also been expected that its clauses would be strengthened to prevent the proposed GRA from being a rubber stamp for the relevant minister who, in the draft law’s current form, holds considerable sway over the Authority.
An analysis we did using Google’s flagship AI model Gemini 2.5 Pro said Sri Lanka’s Gaming Authority Bill had weak provisions for regulatory independence, vague suitability criteria for operators, a profound lack of robust and specific harm-minimisation tools and technologically outdated enforcement powers against online gambling.
The Bill, it said, “appears philosophically weighted towards economic promotion and revenue collection”.
In its current form, the GRA Bill—if passed—will establish a non-independent regulator who serves as a proxy for the Minister of Finance. That cannot give an international operator of repute any degree of comfort. And Melco, in its annual report, has indicated considerable discomfort at the prevailing situation.
Amend the Bill
Sudaraka Ariyaratne, a Research Consultant at Advocata Institute, a Colombo-based think tank, has been actively pushing for change.
“The sudden publishing of the GRA Bill in May seemed to suggest that the government wanted it passed before the opening of City of Dreams Colombo,” he told the Sunday Times. “Frankly, there would have been little time for the kind of substantial revisions the bill requires to create a regulatory body worth its salt under such a tight timeline.”
“But now that the casino has been opened and the Bill has yet to be voted on in the parliament, there is ample time to withdraw the bill, redraft it with international expertise, and table a better version of it for a vote,” he urged.
A redrafted gambling Bill should not give the Minister of Finance single-handed authority to regulate the industry like the current one does, Mr. Ariyaratne stressed. It should include the state-run lottery boards under its regulatory oversight (which it currently does not do), say exactly how online gambling and its ill effects on Sri Lankan youth are to be regulated, and ensure that provisions are included to prevent the siphoning off of gambling revenues overseas through junket operations.
“It is in Melco’s and every local and international investor’s interest to have a gambling authority that can give the industry a perception of integrity and the regulator in the current gambling bill falls short of that,” he held.
| What will entail Bluehaven Services operations Melco’s subsidiary in Sri Lanka, Bluehaven Services (Private) Limited, is one of six companies authorised by the government to operate gaming activities. Bluehaven has a casino lease agreement with a subsidiary of Sri Lanka’s John Keells, Waterfront Properties (Pvt) Ltd, under which Bluehaven has leased an area within the “City of Dreams Sri Lanka” to operate a casino business. Bluehaven was granted a 20-year casino business licence on March 27 last year by the Sri Lanka’s Ministry of Finance, Economic Stabilization & National Policies. It is effective till March 21, 2044. It is non-transferrable and does not permit online casino operations. The Melco subsidiary is required to pay an annual levy of Rs. 500mn (approximately US$ 1.7mn) from the fiscal year it commences gaming operations. A monthly gross collection levy of 15% of the total collections from the business of gaming is also payable, with an exemption if monthly gross collections do not exceed Rs. 1mn or approximately US$ 3,400. An annual tax of 40 percent on the gains and profits generated from the casino must be paid to the Inland Revenue Department. Gaming revenues are exempt from value-added tax exempt although some non-gaming transactions may be subject to VAT. Bluehaven is required to invest a minimum of US$ 100mn into the casino project by the commencement of casino operations or June 27, 2026. This is a condition for receiving certain concessions, such as exemption from customs duty. The investment must be funded by 20 percent equity and 80 percent loan capital as a foreign direct investment. The company must also operate the casino in an integrated resort where a minimum of US$ 500,000 has been invested. | |
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