Wed, Sep 18, 11:20am by Kevin Pitstock
On Thursday, the government of Sri Lanka approved two investments in casino developments in the capital city of Colombo. One of the casino projects approved was by Australian gambling developer, James Packer.
The deals have been debated by Sri Lankan politicians for months, as opposition figures have denounced the reported 10-year tax holidays offered to the owners of both resorts. A government spokesman said Thursday the tax holiday would be “partial”, perhaps alleviating some of the criticism on that point.
Keheliya Rambukwella, a spokesman for the government, said, “Both the mixed developments will receive a 10-year tax holiday for their hotel part of the operation. The gaming part of the operation is not covered by the tax holiday.”
Since the gambling operation is likely to generate more revenue than the hotel, this is a major clarification. If Sri Lanka collects revenues from the gaming in its first 10 years of operation, it makes a lot more sense for politicians to approve such a plan.
The idea of having legalised casino gambling in Colombo has been controversial. Local religious figures wanted all projects to be placed inside a zone for casino gambling, while developers preferred to build overlooking Beira Lake. Then a high ranking military officer, who happened to be the brother of the president, criticised Crown Ltd.’s hotel design because it blocked the view of the lake. This was solved with a redesign which created two hotel towers–not one.
Even the terms used to describe the projects acquired euphemisms, which have caused some amount of confusion in the media over what is even being built. The Sri Lankan government called the casinos “mixed developments”, which led several media outlets to speculate James Packer was building a non-gambling hotel resort in the city. The confusion was intentional.
John Keells’ holding company will build the other casino development. It is the larger of the two designs, with a price tag of $650 million. The Crown Colombo is going to cost a reported $350 million, though a government official with knowledge of the plans suggested a few weeks ago the price might rise eventually to $400 million or $500 million.
Either way, the people of Sri Lanka hope the Crown Colombo and the Keells casino will lure VIP gamblers from China and elsewhere in Asia. The gambling revenues from Asian high rollers (and average gamblers) now represent over 40% of the world market, edging out American gamblers as the largest gaming demographic in the world.
Politicians and casino developers in Australia, New Zealand, Macau, Singapore, the Philippines, Vietnam, Malaysia, and Sri Lanka have agreed on plans to build world-class casinos to compete for these gamblers’ interest. Japan and Myanmar have discussed changing laws to accommodate such developments. Meanwhile, a bid to build a Macau-style gambling city in South Korea failed, but mainly because the eventual cost was thought to involve over a hundred billion dollars.
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