Despite Sri Lanka actively promoting the development of its gambling industry and having established a new regulatory framework, the latest legislative draft fails to address the licensing, taxation, and regulation of casino intermediaries, leading to widespread external criticism.
This summer, Melco Resorts will open a casino in Colombo's City of Dreams, marking the official start of Sri Lanka's gambling industry. However, as a key part of this process, the draft of the "Sri Lanka Gaming Regulatory Authority Act" was released on May 23. Despite being 48 pages long, it is vague regarding the regulation of intermediary agencies. Although the draft mentions issues related to intermediaries, it does not specify any implementation details. At a subsequent parliamentary public finance committee hearing, officials admitted that intermediaries are not yet included in the tax framework, and whether they will be included remains to be decided.
In response, the "Sunday Times" editorial criticized the legislators' regulatory approach as "hollow and negligent," warning that the lack of regulation of intermediaries could open the door to money laundering activities, especially given the history of intermediaries cooperating with overseas underground forces.
The intermediary model was once prevalent in Macau, providing credit, transportation, and luxury services to high-end gamblers from mainland China, driving VIP gambling revenues to account for 60% of Macau's total gambling income. However, with Beijing intensifying crackdowns on capital outflows and cross-border gambling, the intermediary system has rapidly declined since 2021. In 2023, two gambling tycoons—former chairman of Suncity Group, Alvin Chau, and chairman of Tak Chun Group, Levo Chan—were sentenced to several years in prison and fined heavily for illegal gambling, fraud, and organized crime, adding insult to injury for the intermediary industry.
Today, fewer than 20 registered gambling intermediaries remain in Macau, significantly down from 245 in 2014.
In February this year, the Sri Lankan cabinet approved the establishment of a national gambling regulatory authority, whose responsibility is to solely regulate the country's online and offline gambling activities, including sports betting, cruise casinos, and the Colombo Port City project. City of Dreams, as Sri Lanka's first integrated resort project, began trial operations in October last year, featuring nearly 700 hotel rooms, dining, entertainment, and convention facilities, with plans to add a casino and more hotel rooms in the future. In March, Melco Resorts was granted a 20-year gambling license, which officially took effect on April 1.
The project, jointly developed by Melco Resorts and local real estate giant John Keells Holdings, represents a total investment of $1 billion. Although the gambling prospects are anticipated, the absence of a regulatory system remains a concern.
Officials from the Financial Intelligence Unit stated at a parliamentary hearing that there is currently no clear mechanism to regulate intermediaries, "However, once the gambling regulatory authority is officially established, it will have comprehensive authority to issue detailed rules and regulations." The tension between regulatory delays and industry development is a key issue that Sri Lanka's gambling industry needs to resolve urgently.
