Despite Sri Lanka's preparations to implement stricter gambling regulations, officials warn that gambling intermediaries active in casino promotion (i.e., "gambling agents") may still operate outside the regulatory and tax systems, becoming a potential legal gray area.
According to the Sunday Times, at a recent public finance committee meeting, representatives from the Central Bank and the Financial Intelligence Unit (FIU) pointed out that current laws almost leave a blank in the control of gambling intermediaries, and tracking their financial flows is challenging. Although casinos themselves have been incorporated into the tax and regulatory systems, it is still undecided whether the same applies to intermediaries.
Central Bank officials admit that there is a lack of real-time tracking mechanisms to monitor how gambling intermediaries move funds in and out of the country. This makes combating money laundering and enhancing tax compliance exceptionally difficult.
The "Gambling Regulatory Authority Bill," currently in the gazette publication stage, marks a step towards formal legislative regulation in Sri Lanka, but industry insiders point out that the bill does not specify regulations on intermediary licensing, regulatory obligations, or the legality of issuing credit. In contrast, mature gambling markets like Macau impose stricter controls on intermediaries, requiring licenses and prohibiting the issuance of credit; Sri Lanka has no similar provisions yet.
This regulatory gap becomes more sensitive as the Dream City Casino is about to open in Colombo. The casino, a joint venture between Melco Resorts & Entertainment and local enterprise John Keells Holdings, holds a 20-year operating license. Analysts note that as the high-end gambling market expands, the role of intermediaries may become more active, and if not regulated early, could lead to greater financial and social risks.
Moreover, the operation of casinos on foreign cruise ships docked in Sri Lankan waters also raises concerns. Officials from the Financial Intelligence Unit point out that these cruise ships have loopholes in legal applicability and regulatory scope, making them easy channels for tax evasion and money laundering, and targeted measures should be introduced as soon as possible.
The meeting also addressed issues of compliance with international financial sanctions. Financial regulators reiterated that despite political statements suggesting a relaxation of transactions with Russia, given the US sanctions, financial dealings involving Russian entities are still prohibited in Sri Lanka, and banks and payment institutions need to remain vigilant.
Overall, although Sri Lanka is trying to establish a modernized gambling regulatory system, the ambiguous zone surrounding gambling intermediaries still constitutes a blind spot in compliance and financial risk, requiring accelerated patches and amendments before legislation is finalized.
