Sri Lanka, fresh off the launch of its first integrated casino resort, has passed a bill to establish a Gambling Regularisation Authority (GRA).
However, an economist from the Advocata Institute warns the current framework could fuel corruption and rent-seeking rather than ensure effective oversight.
In a commentary published Monday in the Daily Financial Times, research consultant Sudaraka Ariyaratne argued that the proposed GRA lacks the independence needed to function as a credible regulator. While he acknowledged the bill as “a welcome step,” Ariyaratne said its flaws may prevent Sri Lanka from competing regionally and instead risk creating a weak regulator similar to Cambodia’s troubled gaming sector.
According to Ariyaratne, the bill narrowly focuses on casinos while excluding lotteries and overlooking the fast-growing iGaming sector—something he suggested appeared “deliberate.”
He also raised concerns over excessive control granted to the Ministry of Finance, which would have the authority to appoint board members and directors general, draft regulations, issue directives, and oversee funding. Such a structure, Ariyaratne cautioned, undermines credibility: “The regulator won’t even appear independent if the Finance Minister can essentially call all the shots.”
Melco casino opened 2 August
In February, Sri Lanka’s cabinet approved the draft bill to create a national gambling regulator, which was later submitted to Parliament for review.
An April notice in the Government Gazette stated the new authority would serve as the “sole independent regulator” with wide-reaching powers over gambling operations, including online platforms, offshore betting, ship-based gaming, sports betting, and land-based venues.
Currently, Sri Lanka’s land-based gaming sector is limited to one integrated resort (IR) — City of Dreams Sri Lanka, located in Colombo Port City. Melco Resorts & Entertainment launched Phase 1 of the $1.2 billion (£901m/€1b) project last October, followed by Phase 2 on August 2, which marked the debut of Sri Lanka’s first casino.
Holding a 20-year gaming licence, Melco aims to attract high-end players and tourists from India, China, Southeast Asia, and the Middle East.
‘Get it right now’
Ariyaratne noted that investment from global operators like Melco “signals not only industry growth but also that Sri Lanka is becoming business-friendly.”
However, in its 2024 annual report, Melco raised concerns over the regulatory environment, stating: “Although we have obtained the Sri Lanka licence, there is considerable uncertainty about how the legal and regulatory environment may change.”
Ariyaratne warned that “without clear regulation, new international investors are unlikely to enter the market anytime soon.”
He urged the creation of a “truly independent, incorruptible regulatory authority” — one where the constitutional council has a role in board appointments, the director general is selected through a competitive process, the regulator has greater rule-making authority, and funding comes from licence and regulatory fees rather than government allocations.
He also emphasized that the GRA should extend oversight to “the many international online betting platforms used by local players, including sports and election prediction markets.”
“As this is Sri Lanka’s first attempt at gaming regulation,” Ariyaratne wrote, “it is far better to establish a strong system now than to amend entrenched laws later, when vested interests will have taken hold.”
The bill is scheduled for its second reading in parliament on Tuesday.
