IntelScoops

COLOMBO, Sri Lanka — In a move that could reshape the island’s gaming industry and its relationship with tourism, Sri Lanka’s Committee on Public Finance (COPF) has approved a landmark Bill to establish the Gambling Regulatory Authority. The decision, taken under the acting chairmanship of Member of Parliament Rauf Hakeem, follows multiple rounds of debate on how to balance the sector’s economic potential with the risks of social harm.

The new body, to be set up as an independent regulator, will be tasked with standardizing betting and gaming establishments, monitoring compliance, and introducing safeguards to limit gambling-related harm. According to the Department of Communication of Parliament, the Bill aims not only to tighten oversight but also to channel the industry toward bolstering tourism and stimulating economic growth.

From Informal Oversight to Formal Regulation

For decades, Sri Lanka’s gambling sector has existed in a fragmented legal landscape. While casinos in Colombo operated under specific licenses, smaller betting shops and online gaming outlets often slipped through regulatory gaps, operating under loosely enforced provisions of the Betting and Gaming Levy Act. This patchwork oversight, combined with sporadic enforcement, created an environment where gambling-related crime, addiction, and tax evasion flourished.

Attempts to formalize regulation date back to the early 2000s, when the government introduced higher levies and licensing fees. However, political opposition and concerns over encouraging gambling culture led to stalled reforms. Notably, in 2010, a proposed expansion of casino operations sparked public protests and religious opposition, forcing the administration to scale back its plans.

The newly proposed Authority represents the most comprehensive attempt yet to consolidate regulation under a single body — with powers to issue licenses, monitor compliance, and enforce penalties.

Economic Promise vs. Social Concerns

Proponents argue that proper regulation could transform gambling into a driver of tourism revenue, much like in Singapore or Macau. Sri Lanka’s strategic location and growing hotel infrastructure make it a candidate for high-end gaming tourism, especially from India, China, and the Middle East.

However, civil society groups warn that the push for economic gain must be weighed against the country’s vulnerability to problem gambling. Past studies by the National Institute of Mental Health found that communities with high betting-shop density saw increased household debt and related social issues. Critics fear that without robust addiction support services and strict advertising limits, the industry could exploit vulnerable populations.

Linked Fiscal Measures and Wider Economic Context

The COPF’s approval session also cleared several related fiscal measures, including changes to import duties, adjustments to excise regulations, and new luxury tax provisions on motor vehicles. Analysts note that these approvals reflect a broader government strategy to diversify revenue sources while restructuring the tax base — an urgent priority as Sri Lanka works to stabilize its economy under an International Monetary Fund program.

Learning from Regional Precedents

Other Asian nations have grappled with similar balancing acts. Singapore, which introduced its Casino Regulatory Authority in 2008, coupled gambling expansion with strict entry levies for locals and funding for problem gambling programs. Cambodia’s more laissez-faire model, in contrast, generated fast tourist growth but drew criticism for weak oversight and links to organized crime.

Sri Lanka’s lawmakers appear to be leaning toward the Singaporean model — seeking controlled growth under firm regulation, though much will depend on the political will to enforce rules against powerful operators.

Next Steps and Political Dynamics

The Bill will now proceed to the full Parliament for debate and final passage. Supporters expect a smooth vote, citing the government’s majority, but opposition MPs have hinted at proposing amendments related to advertising restrictions, community benefit funds, and measures to address gambling addiction.

As Sri Lanka’s policymakers weigh these trade-offs, the question remains whether the new Gambling Regulatory Authority can deliver on its promise: to harness the sector’s economic potential while shielding society from its well-documented harms. If history is any guide, the true test will come not in the drafting of rules, but in their consistent and transparent enforcement.

Timeline of Key Developments

2007–2010: Early Regulatory Attempts
Informal gambling networks, including small betting shops and online operations, proliferated in urban centers. Previous regulatory measures existed on paper but were limited by fragmented enforcement. Communities reported rising concerns over youth exposure to betting, with social activists highlighting addiction and family disruption.

2011–2015: Expansion of Betting Culture
The rapid growth of online gambling, combined with increased tourism in coastal regions, exposed gaps in the country’s regulatory framework. Law enforcement agencies struggled to monitor cross-border online platforms, while local bookmakers operated with minimal oversight. Public discourse around gambling shifted from moral debate to economic pragmatism: how could the state benefit from an inherently risky sector?

2016–2019: Social Consequences Gain Attention
Studies by non-governmental organizations and media investigations revealed that unregulated gambling contributed to rising debt levels among lower-income families. High-profile incidents, including disputes involving illegal betting syndicates, fueled calls for a comprehensive regulatory structure. Parliament debated several proposals, but political consensus was elusive.

2020–2024: Policy Planning and Draft Legislation
Amid ongoing fiscal pressures, Sri Lankan policymakers began examining gambling as a potential source of tax revenue and tourism development. Drafts for a centralized regulatory authority circulated within the Ministry of Finance and the Department of Parliament, emphasizing three core objectives: protect vulnerable communities, standardize betting operations, and stimulate economic growth.

April 2025: Gazette Publications and Preparatory Regulations
In preparation for the Bill, the Committee on Public Finance reviewed and approved multiple fiscal instruments:

• Section 10 of the Customs Ordinance regarding import duties.
• Section 3 of the Excise (Special Provisions) Act for excise administration.
• Section 19 read with Section 51 of the Finance Act on luxury taxes for motor vehicles.

These measures reflected a broader approach to structured economic governance, signaling that the gambling sector’s regulation was part of a coordinated fiscal strategy.

Mid-2025: COPF Approval
Under the acting chairmanship of MP Rauf Hakeem, the Committee approved the Gambling Regulatory Authority Bill. Attendees included Deputy Minister Chathuranga Abeysinghe and MPs Ravi Karunanayake, Dr. Kaushalya Ariyaratne, Attorney-at-Law Lakmali Hemachandra, and Nishantha Jayaweera.

The newly approved Authority is tasked with:

• Licensing and monitoring gambling and gaming establishments.
• Reducing social harm through public education and compliance enforcement.
• Driving tourism initiatives linked to regulated entertainment.
• Contributing to national revenue through transparent oversight.

Looking Ahead
Analysts observe that the establishment of the Gambling Regulatory Authority is both symbolic and practical. Symbolically, it demonstrates Sri Lanka’s willingness to confront long-standing governance gaps. Practically, it lays the foundation for a regulated industry that could generate significant economic returns, particularly in tourism and luxury entertainment sectors.

However, challenges remain. Past incidents reveal the difficulty of enforcing regulations against informal or illicit operators. Experts emphasize the need for comprehensive monitoring, community engagement, and strong political will to ensure that the Authority’s broad mandate translates into tangible outcomes.

Human Impact and Social Stakes
Beyond fiscal and legal considerations, the bill carries human implications. Families affected by gambling addiction hope that the Authority’s preventive and rehabilitative strategies will offer relief. Business operators, meanwhile, anticipate clearer rules that could legitimize their ventures while ensuring a level playing field.

For Colombo’s policymakers, the Gambling Regulatory Authority represents a test of governance in a sector long associated with both opportunity and risk. The coming months will determine whether the country can balance economic ambitions with social responsibility—a gamble in its own right.