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View of Galle Face, Colombo (Photo credit: Wikipedia)

Sri Lanka has become one of Asia’s most promising economies in recent times, yet the potential of it’s gambling sector is only starting to gain recognition amongst international operators looking to expand their presence in Asia.

With marque casinos propping up in Macau, Singapore, and now the Philippines, there is yet to be a similar foray into India, where the relatively untapped gaming market has proven thus far to be impenetrable for foreign casino operators. Seemingly undeterred by India’s stringent gambling laws, Las Vegas Sands’ Chairman and CEO Sheldon Adelson has repeatedly expressed his desire for an Indian expansion, including an enquiry with Delhi’s Ministry of Tourism in 2008 that went unanswered. And it seems LVS isn’t the only one targeting India as both MGM Resorts International and Caesars Entertainment are said to have had preliminary partnership talks with Delta Corp., the owner and operator of several casinos in the southern state of Goa – one of two Indian states where gambling is somewhat legal.

While the big Las Vegas operators struggle to find a way into the Indian market, there may be better prospects elsewhere in the region. Enter Sri Lanka, a vibrant island nation in the Indian Ocean, opportunely situated within 4 hours flight of India’s major cities. The end of a gory civil war in 2009 has since resulted in visible increases in tourist arrivals and foreign investment, giving rise to Sri Lanka as one of Asia’s most promising economies. Yet as Sri Lanka continues to attract FDI across various other sectors, the island’s gaming market is only just starting to garner interest from foreign players as a viable gateway into India and the greater region.

Sri Lanka’s current gaming industry is interesting. Only a few small casino establishments exist in the capital city of Colombo, most of which have been in operation for the best part of 30 years, catering to a select mix of locals and tourists. In 2010, the government designated special legalized gambling zones in an attempt to attract new operators. Tax concessions have also been offered to large-scale hospitality projects seen to bring considerable investment to the country, as was given to Shangri-La’s upcoming hotel developments. With such incentives on offer, Sri Lanka appears to be finally winning the attention of major casino operators, with India’s Delta Corp. leading the way through the acquisition of developmental land on the outskirts of Colombo. Australian casino operator Crown Limited may also soon follow as it is reported that billionaire owner James Packer made a recent trip to the island to meet with government officials and explore prospects for a casino.

For the time being, gambling in Sri Lanka may be seen as a far cry from the glitz and glamour found in the mega-casinos of Macau or Singapore, but the island’s positive outlook towards gaming could be a welcoming sign for the likes of Las Vegas Sands and others seeking further expansion in Asia. With a thirst for foreign investment and a cooperative government, Sri Lanka could have the potential to follow the footsteps of what Macau has become in recent times – a $38 billion per year jackpot.

Update 2/3/13: At the time of writing this story, James Packer’s visit to Sri Lanka was reported by local media in Colombo but not confirmed. However, his visit has since been confirmed by the Sri Lankan Minister of Investment Promotion.