Sri Lanka’s gaming sector risks falling behind

• A massive unregulated online gaming space threatens to undermine the country’s ambitions to attract a high-value foreign clientele, particularly from the lucrative Indian market

By Nishel Fernando

Despite recent efforts to formalize its gaming industry through a new regulatory authority and aggressive taxation, Sri Lanka is at severe risk of falling behind global competitors due to glaring blind spots in its digital oversight and a lack of technological readiness.   

International gaming experts speaking at the SPiCE South Asia 2026 conference held in Colombo this week issued a stark warning that local authorities are prioritizing rapid revenue generation over the comprehensive, tech-driven frameworks required to build a sustainable integrated resort ecosystem. While physical casino floors now face stringent oversight, a massive unregulated online gaming space threatens to undermine the country’s ambitions to attract a high-value foreign clientele, particularly from the lucrative Indian market.   

The most critical area where Sri Lanka is currently lagging is the regulation of the digital gaming frontier. Industry estimates suggest a significant majority of global casino activity has shifted online, yet Sri Lanka’s oversight remains heavily skewed toward traditional brick-and-mortar operations. While the newly enacted Gambling Regulatory Authority Act No. 17 of 2025 aims to bring the entire industry under one umbrella, experts warn that the digital space remains largely unchecked, leaving physical operators at a competitive disadvantage and exposing consumers to unregulated platforms.   

International gaming veteran Shaun McCamley, Founder and Chairman of GameWorkz, cautioned against relying solely on taxation—such as the recently imposed 18 percent gross collection levy and the $100 local entry fee—if the fundamental regulatory architecture cannot keep undesirable elements out. “The government really needs to establish a regulatory framework first, not just tax,” McCamley stressed, adding that “to succeed, you must have a strong regulatory framework and keep the bad guys out.” 

Sri Lanka is also falling behind the curve in adapting to changing global consumer behaviours, particularly the explosive rise of social gaming. McCamley highlighted that the modern foreign player is fundamentally different from the high-rollers of the past, increasingly seeking gamified digital experiences where social status and peer recognition replace traditional financial payouts. While the global industry is pivoting toward these holistic, tech-first entertainment hubs, Sri Lanka’s current focus remains largely anchored to outdated casino models. To capture the tech-savvy Indian demographic—who are looking outward due to strict domestic gaming laws—Sri Lanka’s integrated resorts must offer seamless digital payment integrations and sophisticated social platforms, areas where the local industry is currently underprepared.   

Compounding these technological shortfalls is a structural vulnerability within both corporate boardrooms and regulatory bodies. International operators emphasize a technology-first approach to compliance, utilizing advanced software for online oversight. However, McCamley noted a concerning global trend where sprawling gaming operations and oversight authorities are increasingly led by financial executives with “zero experience, zero exposure to gaming floor.” He pointed out that placing “accountants into positions” without practical industry knowledge creates a massive gap in understanding what the sector actually requires. This lack of specialized expertise among both operators and regulators significantly hinders the sector’s ability to implement advanced digital tracking and enforce meaningful compliance, a misstep that has historically caused severe regulatory failures in markets like Australia.   

Furthermore, failing to establish ironclad data privacy protocols could prove catastrophic for Sri Lanka’s efforts to attract international tourists. Boshan Dayaratne, Committee Chair for the Digital Economy at the International Chamber of Commerce Sri Lanka, emphasized that in the digital age, trust is the ultimate currency. “If you don’t have that kind of trust, probably the game is over,” Dayaratne warned. Operators must navigate the strict mandates of the Personal Data Protection Act, which holds organizations absolutely responsible for safeguarding personally identifiable information. With authorities possessing the power to impose fines of up to Rs. 10 million or 2 percent of global turnover for data breaches, Dayaratne noted that any failure to secure player data is a fundamental failure to look after the interests of all stakeholders. If Sri Lanka cannot rapidly bridge these digital and regulatory gaps, it risks squandering a unique opportunity to become a premier, world-class entertainment destination.