Gaming can be a $ 1 b industry with tourism upside: Analysts
Tuesday, 2 July 2013 00:10
With existing players getting aggressive and new brands being lured in, the gaming scene in Sri Lanka has the potential to expand to a billion dollar industry from its current fledgling status, especially with an upside in the tourism and leisure markets, according to analysts.
For the past 15 years there are four casinos being operated by formal players in the country who pay Rs. 100 million per location per annum. They are Bally’s, Bellagio, MGM and Stardust, with the latter also having a VIP area called Marina. As per a 2011 Budget proposal, the then existing operators were required to incorporate companies by 2013 in a move to formalise their businesses.
The operators are also subject to 40% corporate income tax from 2012 onwards in addition to 5% turnover tax. These separate gaming places also employ around 400 people each.
Industry analysts estimate the present revenue from the fledgling gaming industry in Sri Lanka is around $ 50 million. This is minute considering the $ 34 billion raked in by gamers-hot-sport Macau last year and $ 6 billion achieved by Singapore, another relatively new entrant to the industry. The rapid growth in revenue and profile of both Macau and Singapore has dwarfed the gamers’ iconic location Las Vegas which has annual revenue of only $ 6 billion.
The Philippines, which has gained in popularity as a tourist destination, has also formalised its gaming industry two years ago with the move bringing in better fortunes. For example, prior to a formal arrangement, revenue from the Philippines gaming industry was only $ 400 million per annum but last year it tripled to $ 1.2 billion whilst estimate for this year is around $ 1.6 billion and a target of $ 2 billion by next year.
Closer to home, the offshore gaming opportunity in Goa, India, generates $ 50 million revenues per annum with four special designated cruises operating.
Analysts said that in tandem with the rebound in tourism and leisure activities in post-war Sri Lanka, the scope for gaming to become a billion dollar industry is high.
Existing players have turned aggressive both in terms of offerings and promotion whilst growing interests by top global brands including Crown of James Packer-fame has put Sri Lanka in the radar of casino players.
As evidenced by success of Macau, Singapore and the Philippines, casinos are also a magnate to lure tourists.
Analysts said Sri Lanka emerging as a gaming centre could draw more tourists from India and the Middle East in addition to enticing frequently visiting business travels and tourists on leisure from other destinations.
Packer, who is Australia’s third richest citizen who has partnered with Stardust-fame Ravi Wijeratne, is currently negotiating for what is described as “an integrated resort” of 400 rooms and other facilities with an investment of $ 350 million whilst premier blue chip John Keells Holdings’ $ 650 million investment in Glennie Street, Colombo 2 is also for an integrated resort with a five star of 900 rooms.
Business leader Dhammika Perera, who has roots in the gaming industry, according to analysts is also planning a separate mega project down D.R. Wijewardena Mawatha.
Given the profile of these projects, the synergies between tourism, leisure, entertainment sector and the gaming industry can be significant.
However analysts noted that with the expected upturn, Sri Lanka needs to have a more formalised regime for casinos. One is proper legislation by expanding the Betting and Gaming Act, clear cut rules and regulations as well as a proper regulator.