Sri Lanka’s new casino bill faces scrutiny over junket oversight gaps

Sri Lanka’s efforts to tighten oversight of its gambling sector have come under renewed scrutiny, as the Parliamentary Committee on Public Finance raised concerns over the absence of regulatory provisions for junket operators in the proposed Gambling Regulatory Authority Act.

The bill, which aims to establish an independent authority to regulate the gaming industry, is currently undergoing stakeholder consultation ahead of being tabled in Parliament later this year.

During a recent committee session, officials from the Central Bank of Sri Lanka highlighted that the draft legislation does not account for the activities of junket operators, third-party agents who bring high-stakes gamblers, often from overseas, to domestic casinos.

“At present, junket operators fall outside our existing tax and licensing structures,” a Central Bank official stated. “The only mechanism in place is within the Fiscal Policy Department of the Ministry of Finance, and even that is limited to licensing. There is no enforcement provision under the Casino Business (Regulation) Act of 2010.”

The omission has raised flags among regulators and lawmakers, who fear that continued ambiguity could create regulatory blind spots and foster opportunities for tax evasion and illicit financial flows.

While casino revenues are currently taxed, transactions linked to junkets, often involving foreign currencies and non-cash credits, frequently bypass these mechanisms. “Whether junkets will be brought under the proposed Gambling Regulatory Authority’s revenue mechanisms remains to be seen,” the Central Bank official added.

Globally, junkets have drawn scrutiny in markets such as Macau and the Philippines for links to unregulated credit, money laundering, and fraud. In contrast, Sri Lanka has yet to introduce specific licensing or reporting standards for these intermediaries.

The Financial Intelligence Unit (FIU) further raised concerns about junket-funded tours from India using informal payment systems like Hawala, as well as gambling operations on foreign cruise ships within Sri Lankan waters.

City of Dreams, Sri Lanka

The debate has taken on added urgency with the upcoming launch of City of Dreams Sri Lanka, a major integrated resort project in Colombo spearheaded by Melco Resorts and local conglomerate John Keells Holdings. The casino, operating under a 20-year licence, is expected to attract VIP clientele, potentially increasing the influence of junket operators unless regulatory safeguards are established.

The proposed legislation’s silence on junket-specific provisions, including rules around credit issuance and financial disclosure, has prompted calls for more robust language within the bill.

While government officials maintain that regulations can be introduced once the Authority becomes operational, some members of Parliament argue that leaving these issues unaddressed at the drafting stage could weaken enforcement.