Sri Lanka Finance Committee Pressures Industry Over Illegal Gambling Rise

Sri Lanka’s Committee on Public Finance (COPF) has issued a statement about the rapid growth of illegal online gambling in the country. They warn that delays in introducing regulations are giving offshore operators opportunities to exploit the industry. 

Speaking in Parliament, COPF chairman Harsha de Silva said the country’s existing casino framework was never designed to regulate online gambling, leaving authorities with limited control. He also revealed that over 40 payment channels are being used to fund online gambling activity, making enforcement difficult.

“The rapid growth of iGaming, particularly among younger users, has been facilitated by the lack of a dedicated regulatory framework and the growing presence of overseas operators,” de Silva told Parliament.

Delayed gambling reforms raises financial oversight concerns

De Silva questioned whether regulators have adequate oversight of the payment systems supporting online gambling and criticised the slow progress of regulatory reforms. He noted that although the head of the proposed Gaming Regulatory Commission indicated new online gambling rules could arrive by November, those measures remain unimplemented. 

The COPF chairman expressed frustration with Sri Lanka’s Central Bank, saying the committee had not received satisfactory responses to questions submitted earlier this year regarding the monitoring of financial transactions.

He urged lawmakers to accelerate approval of the country’s pending anti-money laundering and counter-terrorist financing legislation, arguing stronger financial safeguards are needed to prevent illegal operators from exploiting the current system’s weaknesses.

New gambling regulator to improve industry oversight

The concerns come as Sri Lanka develops a regulatory framework for the gambling sector. Over the past year, the government approved legislation to establish a single Gambling Regulatory Authority that will oversee online gambling, land-based casinos, offshore gaming and gambling activities within Colombo Port City.

Once operational, the regulator will be responsible for licensing operators, enforcing anti-money laundering and Know Your Customer requirements, promoting responsible gambling and monitoring compliance across the regulated market.

The new framework will provide better oversight than the fragmented framework in place.

Government balances growth ambitions with strict regulation

While lawmakers push for faster regulation, the government promotes Sri Lanka as a future regional gaming and digital services hub. 

Speaking earlier this year at the Global Game Connect 2026 summit in Colombo, Deputy Minister of Industry and Entrepreneurship Development Chathuranga Abeysinghe said the government remains committed to supporting the industry’s long-term growth.

He described gaming as a sector capable of attracting investment, tourism, technology and digital innovation, highlighting Colombo Port City as an appealing project for international gaming and technology companies.

However, de Silva’s latest remarks suggest regulatory implementation is struggling to match those ambitions. As gambling reforms advance with AML legislation and the Gambling Regulatory Authority, the growth of Sri Lanka’s industry will be determined by its speed of implementation and tackling of illegal gambling expansion.

Sri Lanka’s gambling industry is under scrutiny from the Committee on Public Finance over the rapid growth of illegal operators. This issue has been attributed to the delayed implementation of reforms, such as the country’s pending AML and CTFC approval. Curbing black market growth is crucial to Sri Lanka’s future plans of becoming a regional gaming hub.