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Packer’s luxury project could start next year ‘minus a casino’
Construction of Australian casino mogul James Packer’s “integrated super luxury resort” could start in the first half of 2014 if the Government convinces opponents that the project no longer includes a casino. The same applies to two other resorts (one by business tycoon Dhammika Perera and the other by John Keells Holdings) for which gazettes were published last week. The amended gazettes have omitted the words “gaming activities” and “gaming facilities” but analysts say they raise more questions than they have answered.
“This is just old wine in new bottles,” blistered Ven. Maduluwawe Sobitha Thera, a prominent Buddhist monk and political activist. “Do you think James Packer will come to Sri Lanka and run a hotel? This is a lie, a fraud.” Ven Dr Anamaduwe Dhammadassi Thera, secretary of the Asgiriya Chapter, said he will comment after he studies the new gazettes.
“These are worse than the previous gazettes,” said Harsha de Silva, UNP Parliamentarian. “In those, they tried to tell the people what they intended to do. In the new gazettes, they are just plain lying.” “James Packer has so-called integrated resorts around the world,” he asserted. “They are all casinos. James Packer does not build restaurants and conference halls. He builds casinos.”
Mr. Packer has already gone on record—including before shareholders of his company, Crown Ltd—that his operation in Sri Lanka will include a casino. Promotional materials for Crown Sri Lanka reveal as much. Just seven days ago, Ravi Wijeratne, chairman of Rank Holdings (Pvt) Ltd and Mr. Packer’s local partner, said in a newspaper interview that he will shift his existing casino into the new resort once built.
Dhammika Perera, who is Mr Wijeratne’s rival in the local casino business, is also expected to move an ongoing gaming concern into his proposed Queensbury resort. John Keells has already announced plans to conduct gaming activities at its new integrated resort, to be set up by a project company called Waterfront Properties (Pvt) Ltd.
There was no clarity from the Government last week about how the gaming component would be introduced into the hotels once they were built. But industry sources said it was unlikely that the Government, having gone the distance to have its casino plans approved, would drop them now.
“They are just trying a different path,” said one market analyst, requesting anonymity. “It is the one of least transparency and one that exploits loopholes rather than clears them. At present, the status quo is hazy, confusing and far from ideal.” Investment Promotion Minister Lakshman Yapa Abeywardena was away from Sri Lanka. However, Deputy Minister of Investment Promotion Faizer Mustapha stressed that there was no reference to casinos or gaming in the relevant gazettes. He said tax concessions were only being granted under the terms of the relevant act to three mixed development projects.
Mr. Mustapha also said his ministry had no current applications to set up casinos under Section 3(2) of the Strategic Development Projects Act. “What you are asking about is not within the ambit of my ministry,” he continued. “My ministry does not give approvals for casinos. Permission has been sought for mixed development projects, which can be constructed, and not for gaming and casinos.”
Asked what the position would be if an existing gaming operation was to be shifted into these integrated resorts, he said, “If that were to be done he (operator) would have to comply with a separate regulatory framework which my ministry has nothing to do with.” He also admitted that such a framework did not still exist.
Unlike others in Government, Mr. Mustapha avoided the word “licence” when referring to the regime under which gaming centres were presently being run. He said the casinos functioned “in an environment of a revenue-generation mechanism”. He denied they were illegal, adding, “They have been given legality with regard to income generation and revenue generation.”
Five casinos—all belonging to Mr. Wijeratne or Mr. Perera—have complied with the Betting and Gaming Levy Act of 1988 and are paying an annual levy of Rs. 100 million to the Government. Various ministers have repeatedly referred to casino licences when none exist.
Minister Mustapha said the Government will promulgate regulations to give effect to the Casino Business (Regulation) Act of 2010. “The regulations are coming,” he maintained. “They should come in the near future”. Countries with organized betting and gaming sectors all have in place comprehensive regulatory mechanisms. For instance, the basic regulations of the Nevada Gaming Commission and State Gaming Control Board are 411 pages long while Singapore has rules within rules to govern 17 crucial areas. Sri Lanka has none.
Mr. Packer has had to negotiate hard and to comply with strict laws and regulations even in Australia. Last month, the New South Wales Government gave final approval to a Crown Casino resort at Barangaroo on Sydney Harbour. Reports said it was allowed under strict conditions imposed by the Government and the Opposition, including VIP gaming only and no poker machines.
That proposal still needs approval by planning and gaming authorities. Sri Lanka has none of those. “You wait and see, this is going to boomerang on the Government,” predicted Dr. de Silva. “This is James Packer’s Australian boomerang and it will come back and hit this Government in the face.”
Govt. starts new approval process under the Strategic Development Projects Act
With the issuing of the new gazettes on Tuesday, the Government has recommenced the entire four-stage approval process prescribed by the Strategic Development Projects Act. The papers will come before Cabinet again when a mandatory thirty-day period lapses. Within six weeks of being sanctioned, the Minister of Investment Promotion will gazette them once more. They will be submitted for Parliamentary approval within three months from the date of publication.
The earlier proposals had already gone through three stages. But they were withdrawn from Parliament and the relevant gazettes revoked in October amidst gathering protests from clergy, the public and the Opposition. When the new ones appeared, however, there were three proposals instead of the previous two.
Apart from omitting the gaming component, the new gazettes have lengthened the previously proposed “integrated resorts” to “integrated super luxury tourist resorts”. They will include high end shopping malls, high quality residences and office spaces/service spaces “with associated facilities”. Generous tax concessions have been granted, including a corporate income tax waiver for a period of 10 years.
It would be the first time foreign casino operators enter the Sri Lanka market. There is still no casino regulatory authority.