Sri Lanka revises previous position and allows Crown casino

Sri Lanka's government reversed its position on allowing a casino at a project proposed by Crown Resorts, backed by James Packer. This month, Sri Lanka said a casino would be allowed if Packer partnered with a local company. Crown has proposed a US$400 million resort in the D.R. Wijewardena Mawatha area.

The government's latest stance on casinos is contrary to what it said on April 25 when Australian gambling tycoon James Packer's Crown project was approved by the country's parliament. At that time the government said no casino would be allowed in the resort.

Opponents of casinos believe they will lead to a boom in prostitution and damage religious values and culture in the mainly Buddhist island nation.But the gambling industry has been operating there in one form or another since at least the 1980s when many five-star hotels had their own in-house casinos featuring free drinks and food as well as floorshows in addition to the blackjack and baccarat tables.

Government spokesman Keheliya Rambukwella said casinos will be restricted to D.R. WijewardenaMawatha, the area where Crown has planned the hotel and anybody can operate casinos in that area if they have a licence held by a local partner.

Rambukwella declined to comment on which government agency is authorised to issue casino licenses and regulate the industry. He said whether it was Crown or another developer did not matter to the government as long as they worked with a local, existing licence holder.

"There is no legal barrier for existing casino businesses getting new partners. There are five licenses issued and these license holders can have one casino per license. So there'll be five casinos." He added that there would be no new licences issued.

Government officials have told Reuters that two Sri Lankan entrepreneurs have five casino approvals between them. Packer's Sri Lankan partner, Ravi Wijeratne, owns two, and local business tycoon, DhammikaPerera, owns three.

Wijeratne and Perera could not be reached for comment. Officials with Crown did not respond to requests for comment.

Packer, one of Australia's richest men, first obtained cabinet approval for Crown's project in September, but the terms were altered and it has been dogged by delays.

Changing government tune

President Mahinda Rajapaksa and his coalition government's changing stance on casinos has drawn criticism from Buddhist and other religious leaders, opposition parties and even from within its own ranks.Stung by the criticism, the government had amended public documents to remove the word "gaming" for Crown's project and two others being developed.

When the three projects were initially approved, both Rajapaksa and Economic Development Minister Basil Rajapaksa said they would not allow casinos.

Sri Lanka's main opposition, the United National Party (UNP), said the government is misleading foreign investors like Packer and the general public."There are no casino licences existing in Sri Lanka. I challenge Rambukwella to table these licences in the parliament," Harsha de Silva, a UNP legislator, told Reuters. "Those local casino operators have only receipts for paying taxes for their casino operations. They are not licences. Still nobody knows who is issuing casino licences and who will regulate the business unlike specific licences in Singapore."

The other two projects being developed include a US$300 million resort called Queensbury being built by Sri Lanka's Vallibel One, which is expected to include casino near Packer's planned complex.

Sri Lanka's top conglomerate, John Keells Holdings, has committed up to US$850 million for another project called the Water Front, which will also include a casino.

Packer was most recently in the news on Friday when Australian police fined the billionaire gaming mogul and his friend, television executive David Gyngell, US$ 470 each after a wild street brawl in Sydney's world-famous beachside suburb of Bondi.

New South Wales state police said officers had issued a 46-year-old man and a 48-year-old man - identified by media as Packer and Gyngell - with notices for "offensive behaviour" that occurred on Sunday afternoon.

The fine will stand, but no criminal conviction will be recorded if neither of the men contests the notice, police said. A criminal conviction could complicate Packer's regional expansion plans.Sri Lankan officials have said the fight has nothing to do with Packer's Colombo investment.