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Cabinet approves paper on much delayed casino regulations despite Dhammika’s concerns
View(s):By Namini Wijedasa
Mr Perera, popularly deemed Sri Lanka’s biggest casino operator (although he has claimed the businesses were run by his brothers), wanted the paper delayed on the argument that it could drive away investments, authoritative sources said. However, Cabinet overruled his concerns and approved the memorandum, presented by Prime Minister Ranil Wickremesinghe in his capacity as Finance Minister.
The Cabinet paper proposes the promulgation of regulatory guidelines for issuance of licences as well as the supervision of new and existing casinos. At present, all betting and gaming businesses—including the prominent casinos run by Mr Perera and Ravi Wijeratne—are unlicensed.
The paper calls for the Betting and Gaming Levy Act (B&G Act) of 1988 to be amended to lift restrictions on registration. It proposes reinstatement of a requirement that all new licensees under the Casino Business (Regulation) Act of 2010 must register with the Inland Revenue Department (IRD) to pay fees imposed under the B&G Act.
Separately, it envisages raising the casino entrance levy from US$ 100 to US$ 200 or equivalent in Sri Lankan rupees per person. This fee was introduced in the B&G (Amendment) Act of 2015 and approved by Parliament but never collected.
With the Cabinet go-ahead, the Ministry can now issue the regulations and direct the Legal Draftsman to formulate the B&G Act (Amendment) Bill which can then be presented to Parliament after the Attorney General’s clearance.
The promulgation of regulations under the Casino Business (Regulation) Act covering new and existing casinos will provide “a legal basis” to the industry, the memorandum says.
Despite being in operation for decades, the industry has repeatedly resisted monitoring. The Casino Business (Regulation) Act, which is the Regulation Act, was only passed in 2010. The B&G Act is nearly 35 years old.
Under the Regulation Act, a casino shall only be operated under a valid licence—subject to terms and conditions—and within an area designated by the relevant Minister. But, while the Regulation Act was effective from January 1, 2012, the rules were never promulgated.
“Therefore, no licences have been issued under the above Act to operate casinos in Sri Lanka, even for the existing casinos,” the Cabinet memorandum states. “As such, the businesses operating as casinos are not regulated by any mechanism which has resulted in a large sum of revenue foregone to the Government and this may be detrimental to the society.”
Without valid licences, the only mechanism through which these businesses obtain a “certain legal basis to operate” is through registration for taxation at the IRD, the paper points out. But under the B&G Act, as amended by the B&G (Amendment) Act of 2013 and the B&G (Amendment) Act of 2015, the businesses of bookmaker and gaming (i.e., casinos) are not allowed to register with the IRD after May 31, 2013.
The Cabinet paper reveals that just four casinos are now listed with the Inland Revenue Department (IRD). Additionally, the Betting and Gaming Levy (B&G) Act has no provisions to govern persons who are not registered with the IRD. Therefore, taxes cannot be collected from unlisted casinos. The loophole allows the high-income gaming sector to operate outside of the tax net.
“This will constitute a revenue loss to the Government, while creating a gray market as casinos cannot obtain legal status in the country under both the Regulation Act and the B&G Act,” it states.
There are other glaring loopholes and contradictions. For instance, the B&G Act mandates every person carrying on the business of bookmaker and gaming to pay levies listed therein, regardless of whether such activity is lawful or unlawful.
“Hence, the B&G Act does not stipulate the need for having a valid licence to operate a casino as provided under the Regulation Act, which has created ambiguities in administering casino business,” the Cabinet paper states. It was important, therefore, to link the Regulation and the B&G Acts to make a valid licence a prerequisite for registration under the B&G Act.
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