Packer eyes Sri Lanka resort

Packer, one of the richest men in Australia, met with Sri Lankan ministers in February to discuss hotel and entertainment investment options as he expands his global gambling business, which already spans casinos in Australia, Macau, Britain and the United States.
Sri Lanka has allowed casino gambling on and off since at least the 1980s and currently has about nine small-scale properties.

The country is attracting further interest as its economy is pegged to grow 7.5 % this year. It is targeting about us$1.5 billion in foreign direct investment after missing its us$2 billion target in 2012.

Packer is betting on rapid economic growth in Sri Lanka, fuelled by Chinese infrastructure investment, following the end of the country's civil war in 2009. Sri Lanka's proximity to a huge pool of potential gamblers in India and rising inbound tourism numbers are also proving attractive.

But the Sri Lankan government and Crown appeared to be at odds over whether the development would include a casino.

"This is not a casino business and we have not granted any tax concessions which are adverse to the country," Abeywardena told parliament, responding to a question raised by an opposition member. "This will be with a minimum 400-room star class hotel complex and related services including retail shopping, entertainment facilities, fine-dining restaurants, and meeting and convention facilities."

However, a Crown source with knowledge of the discussions told Reuters the company was planning an integrated resort complex, including a casino. The source said talks were ongoing but no decision had been made.

Crown did not immediately reply to requests for formal comment. CLSA gaming analyst Sacha Krien said Crown's investment plan in Sri Lanka made sense, given pent-up demand and high returns for casinos in the region compared to mature markets like the United States and Australia.

"Sri Lanka is a growing tourism hub. Given casinos are largely banned in India, that market is a likely source of visitors, as are Chinese tourists whom have been growing at around 50 percent in Sri Lanka," Krien said. "On our estimates casinos across Asia have generated returns on capital of close to 40 percent, which is an obvious reason for considering other opportunities in the region."

After Packer's February visit, Sri Lanka's parliament sought to amend its Betting and Gaming Levy Act to increase gambling business registration fees and impose a 5 percent tax on gaming turnover.

Abeywardena said tax concessions would be given to Packer's deal after parliamentary approval, similar to those granted to a us$500 million investment by hotel group Shangri-La Asia .

The Crown source declined to comment on tax concessions.