Sri Lanka to send bill regulating online gambling and offshore casinos at Colombo Port City to parliament

Sri Lanka is taking a significant step towards reforming its gambling sector by introducing the “Gambling Sports Regularisation Act.” The proposed law provides for the establishment of an independent regulatory authority — the Gambling Sports Regularisation Authority — tasked with overseeing all forms of gambling, including online platforms, offshore casinos, and gambling establishments within Colombo Port City.

Roman Baranovskyi, Senior lawyer at SBSB Fintech Lawyers, comments on the news:

The key innovation lies in the creation of an independent body responsible for licensing, supervision, and enforcement within the gambling sector. According to the legislator, this move is expected to address existing regulatory gaps and to ensure comprehensive oversight of the entire industry.

However, it is widely understood that gambling laws, particularly those regulating this sector, are rarely aimed at “leniency” or “flexibility.” As part of the initiative, an increase in gambling-related taxes and fees is also proposed. Specifically, the bill suggests raising the application fees and increasing the gross gaming revenue (GGR) tax rate. While this is intended to boost state revenues, it may simultaneously discourage venture-driven projects — which, in many cases, constitute the primary source of tax and fee income.

As a result, certain legal and commercial consequences will arise for operators, investors, and the state itself.

Operators will undoubtedly need to adapt to the new requirements, including obtaining appropriate licenses, complying with technical standards, and implementing anti-money laundering procedures. This will likely require a reassessment of current business processes, investments in compliance systems, and staff training. It can be said that interest in the jurisdiction is growing among major industry players who aim to operate “cleanly” under local regulations, while interest from startups — which currently account for over 70% of the sector — is expected to decline, as they typically seek lighter regulatory hubs.

The new regulatory framework could also impact investment conditions and operational models in the region. Similarly to operators, the reforms may open up new opportunities for professional investors but discourage newcomers due to the more stringent financial and regulatory requirements.

It is expected that the adoption of the new legislation will strengthen control over the gambling industry, improve transparency, and generate additional state revenue. Furthermore, it may enhance Sri Lanka’s international reputation as a country with a developed and well-regulated gambling industry — an increasingly sensitive issue in the global community.

Overall, Sri Lanka’s initiative to reform its gambling laws demonstrates a clear ambition to create a transparent and sustainable legal environment for the development of the gambling sector.
Whether this will help the jurisdiction stabilize its tax revenue and regulatory enforcement remains to be seen.