Shut Down in Sri Lanka

More than US$1 billion in resort investment is in jeopardy after an about-face on casinos by the Sri Lankan government of President Mahinda Rajapaksa (l.). Gaming figures prominently in luxury hotels planned by Crown Resorts and others, but religious and political opposition has proved to be too much. While the government previously said it would not allow foreign casinos, local stakeholders were said to be OK. Now, nothing is certain.

Bowing to political and religious opposition, the government of Sri Lanka will not allow casinos inside US.3 billion worth of luxury resorts planned for the capital of Colombo.

The announcement was made by Economic Development Minister Basil Rajapaksa, brother of President Mahinda Rajapaksa, and comes days after the main opposition United National Party staged a demonstration in Colombo accusing the government of encouraging vice.

Casinos are also opposed by political parties controlled by the island nation’s powerful fundamentalist Buddhist clergy.

“We voted against these concessions as a warning to the government to correct its course,” Buddhist monk and legislator Athuraliya Rathane said.

“We will not allow casinos. That we say very clearly,” Basil Rajapaksa told parliament. “(The promoters) asked, we did not allow, nor will we allow in the future.”

He made the statement in conjunction with the government’s approval for the three projects to go ahead, minus casinos, and with 10-year corporate tax breaks, which the UNP also opposes.

It is not clear how the news will affect the developments proposed by James Packer’s Crown Resorts and by local hospitality giant John Keells Holdings and Sri Lanka businessman and casino owner Dhammika Petera and his rumored partner, Genting.

There was no immediate comment from any of them, according to Agence France-Presse.

A casino figures prominently in Packer’s proposed $400 million, 450-room Crown Colombo, a joint venture with the country’s largest casino operator, Ravi Wijeratne, and the subject of “detailed discussions” with the government, according to Melbourne, Australia-based Crown. John Keells, the country’s largest listed company, is proposing a $650 million casino and hotel. Petera’s project is pegged at $300 million.

Sri Lanka is home to a handful of small foreigners-only casinos. These were granted recognition by legislation sponsored by the Rajapaksas in 2010 but never formally organized in a regulatory framework. The government had hoped expanding the industry with high-end destination-scale casinos would promote economic development by boosting tourist arrivals and generating badly needed foreign investment for rebuilding the country after decades of civil war with Hindu separatists. Government officials had previously said the stakeholders in the local casinos could partner with the foreign companies, but last week’s pronouncement seems to even block that compromise.

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