Following a recent meeting of the Sri Lankan Committee of Public Finance (CoPF), the nation has now set an official inception deadline for its new gambling regulatory authority, according to local reports.
This latest initiative, led by MP Dr. Harsha de Silva, will see the Sri Lankan Government work in partnership with the Finacial Action Task Force (FATF) to help develop and review its marketplace via the inception of a new regulatory body. Indeed, this process has now already begun, as nominations for a seven-member board have already been made.
Sri Lankan iGaming evades tax
As was revealed in the CoPF meeting, between 60% and 70% of gamblers in Sri Lanka are now active online - compared to between 30% and 40% in the land-based sector. However, the nation still has no regulatory or taxation system for the iGaming space - with officials having sounded the alarm on potentially uncollected tax revenues.
Despite a healthy land-based casino ecosystem existing in Sri Lanka, none of the nation's six casinos are overseen by a gambling-specific regulator and are not authorized to operate online - with offshore and unregulated platforms reaping the benefit of an entirely uncontrolled iGaming space.
Looking forward, this new regulatory authority will have an interesting task balancing governmental interest, which is evidently embedded in finance, with the interest of regulators - who won't want to be taxed out of the market (a common global theme right now, especially in neighboring India).
A regulatory necessity
Over the summer, Sri Lanka's Finance Ministry and Attorney General's Department were heavily criticized by the CoPF - who stated that May's proposed Gambling Regulatory Authority Bill was inadequate. More specifically, the bill was labelled insufficient for the fast-growing modern industry, with the CoPF accusing the Finance Ministry of failing to meet pre-arranged deadlines.
Elsewhere, De Silva underscored that recommendations made to the Finance Ministry - including seeking expert input from jurisdictions with established regulators, such as Singapore - were not taken seriously.
Following further amendments, the Gambling Regulatory Bill was passed shortly after the submission of these comments. However, the fraught nature of communications between different sectors of the nation's financial oversight ecosystem further emphasizes the need for a centralized gambling regulatory authority to oversee the market.
The gambling 'golden goose'
Following the opening of Melco's City of Dreams Colombo Hotel & Casino Resort - touted at South Asia's first luxury integrated resort - in July, the Sri Lankan authorities have now seemingly been awakened to the potential tax revenues of the gambling industry.
This theory was compounded further last month, when the nation's Cabinet of Ministers approved a 3% tax increase on gambling gross collections from 15% to 18% - as well as passing a law which doubled casino entry fees for locals from US$50 to US$100. These amendments now await Parliamentary approval.
Indeed, this approach mirrors that of Brazil, which despite being a vastly different landscape, is now struggling with a highly prolific black market. Many active industry participants in Brazl state that any tax rises should be shelved for the time being to allow the market to develop into maturity.
The tightrope of regulation
The new Sri Lankan gambling regulator will, clearly, have quite the task on its hands. The authority will yield the power to award and revoke gaming licenses, collect revenues, introduce new legislation, promote safe practices and ensure a safe operational industry pertaining to AML and CTF requirements.
However, it will also be responsible for balancing often conflicting governmental and industry interests and - most important of all - ensuring players are protected, to further promote a healthy gambling ecosystem.
In April, Sri Lanka also advanced regulation around online sports betting
