The news that James Packer was in Sri Lanka in March 2013, meeting with government officials and scouting sites for a resort casino in the Indian Ocean island, could signal renewed interest in South Asia on the part of some of the gaming industry’s big players.
Though less heralded than markets like Macau and Singapore, the markets of the western Indian state of Goa and the Sri Lankan capital of Colombo have been prospering for years, nestled within popular resort destinations of great natural and historical beauty and serviced by airports that place them within economical flight times of the major population centres of the region.
Crown, Packer’s Australian flagship, declined to comment on his visit, according to news reports, but the government said discussions centered on “integrated tourism” and that ministers suggested he consider possible investments in Colombo and the eastern city of Trincomalee.
India’s Delta Corp., owner of three casinos in Goa with a fourth scheduled to open this year in the coastal city of Daman some 120 miles north of Mumbai, has one casino in Colombo and bought a chunk of land in the capital back in 2011 for which it has been looking for partners in developing a 150,000-square-foot casino and a supporting hotel of at least 500 rooms. Delta has in the past been in talks with MGM Resorts International and Caesars Entertainment about possible tie-ups in India, where Las Vegas Sands would also dearly like to be, only the Indian government does not permit foreign direct investment in gaming, a considerable obstacle, but one that finds Sri Lanka in a position of increasing importance as a “viable gateway” to the subcontinent’s leisure-hungry millions, as Forbes speculated recently.
The Sri Lankan government certainly thinks so. It has a goal of 2.6 million tourist arrivals by 2016, and there is an international airport in Colombo and an international airline, Sri Lankan, flying to 68 destinations in 33 countries, which it trusts can get it there.
Amendments are being drafted to the 2010 law that granted recognition to the country’s nine or so small casinos which if approved will give substantial tax breaks to companies that invest at the level Packer is considering. The government also wants to bring the industry under the provisions of a law known as the Strategic Development Act which would mean additional tax advantages and other benefits.
But there is a dark edge to this promising picture: sectarian violence, the bane of South Asia’s oldest democracy, the “Pearl of the Indian Ocean,” as Sri Lanka is known.
A bloody insurgency by Hindu Tamils lasted 26 years before it was finally defeated in 2009, and the country’s reputation continues to be stained by attacks led by militant monks of the Buddhist-Sinhalese majority against Hindus, Christians and more recently Muslims. In 2010, the European Union suspended tariff concessions over human rights violations committed in the last days of the suppression of the Tamil revolt. A resolution sponsored by the United States and currently before the UN Human Rights Council seeks to extend those sanctions in a bid to pressure the government to grant access to UN inspectors. How this kind of diplomatic hardball will affect investment is anybody’s guess.
The government says it is confident in business as usual.
Recent incidents of sexual violence have India wrestling with a different kind of public relations problem. But it doesn’t appear to be affecting Goa, which is welcoming upwards of 3 million visitors a year, close to 20% of them from outside the country, the majority of those from Europe. They come for the sun and sand, the lush mountain forests and the charms of the creole cuisine and the World Heritage architecture, legacies of the days when Goa was the jewel of Portuguese Asia.
To graze this cash cow the state in the mid-’90s began licensing the casinos that were operating in some of the better hotels in and around the capital of Panaji. Cruise ships on the Mandovi River joined the mix in 2001. The official position has been to refrain from warming to either.
A note on the website of the Goa Tourism Development Corporation disavows any “endorsement” of or “association” with the industry, which had labored for years under a fairly steep entry fee of 2,000 rupees (US$37) before it was lowered to 500 last spring in exchange for higher licensing fees and an increase in the direct tax from 10% to 15%. The state’s ruling Bharatiya Janata Party wants to push the floating casinos off the Mandovi and out to the Arabian Sea. But the boats have been so profitable they’ve now the largest segment of an industry that employs more than 2,400 people, 1,600 of them locals, and contributes to the public till well more than 600 million rupees (US$11 million) a year. As Tourism Minister Dileep Parulekar, a native Goan, has had to acknowledge: “Casino culture is taking root.”
Read more about the Asian casino market in GBGC’s Global Gambling Report (8th edition) Raising The Stakes. Purchase it here