Is Legalising Gambling a Step in the Right Direction?
Posted on November 13th, 2010

Dilrook Kannangara

Gambling turned the barren dessert of Nevada into one of the most prosperous places on earth. However, like the meat industry or the liquor industry, it is not a good industry to be in if looked at from the moral point of view. Legalising organised gambling is a major step for conservative Sri Lanka. Stiff opposition from religious leaders is understandable. Economic prosperity comes at a cost. When the open economy was introduced in 1977 ahead of India (1988) and China (1980), there was similar opposition. But as time passed, people adjusted to the new economic and social order. Unlike what pessimists predicted, the open economy didn’t result in a total sell out of what is valuable to the people. Saving locals from gambling addiction and making the industry work for Sri Lanka and its people is the key to success of the plan.

 Economic Rationale

With the passing of the Casino Business Regulation Bill with an overwhelming majority in parliament, the government expects to attract more tourists and foreign exchange. It is expected that the move help increase tourist arrivals from 700,000 to one million. Tourism industry is a major money earner for Sri Lanka. Cost structure of the tourism industry is such that a large portion of it is fixed cost and there is no need for repeated capital investments once operational. Increasing the per-head spend by tourists is a good way to improve profitability of the industry without major investments. Well organised gambling can supplement what the tourism industry earns through hotels, sight seeing and various other tourist attractions.

 Sri Lanka is strategically positioned to benefit from a resurgence in the gambling industry. India with a gambling market of USD 75 million has the industry severely restricted. Only the states of Goa and Sikkim allow casino gambling. Most gambling activity that accounts for over 60% of the industry in India is illegal. Pakistan, Bangladesh, Burma, Afghanistan and the Middle East do not allow it. Given the rising economic clout and the already large economies of these nations, Sri Lanka stands to gain immensely by becoming a key player in the region. It is already a USD 30 billion industry worldwide.

 China is in the forefront of the industry. Macau – an independent region of China has overtaken Las Vegas in gambling revenue. Although an Islamic country, gambling is big business in Malaysia.

 Investments in the industry should be properly structured. Although foreign investments must be encouraged, local investments are the key to prosperity as foreign investors take away the profits overseas. Taxation in the industry is very difficult given the manipulation of revenues well known in the industry. A robust taxation and investment management mechanism is essential to profit from the industry.

 What to Watch Out For

Keeping average Sri Lankans away from gambling is a must if economic benefits were to exceed costs. A national gambling addiction will erode everything that is precious. At the moment state sponsored gambling – lotteries to be specific – is a national pastime. There are jackpots to be won every week more than the number of days in the week. In this context allowing a national gambling addiction is highly dangerous. Controlling the operators through licensing coupled with punishments of USD 45,000 and a five year jail term is not sufficient. Law must be enforced.

 Gambling centres for ordinary locals should be strictly regulated. Powerful politicians who are operators of betting centres is a worrying development. The fact that they remain powerful irrespective of government change is even more worrying. How it will be overcome remains to be seen.

 Political Implications

Opposition political parties are against the move. However, UNP is not going to reverse the decision. In fact it was the UNP that initially legalised gambling. UNP is the premier pro-business political party and is closely connected to the global liberal movement. In this background the UNP will never even think of reversing the law.

 As time passes by expansion of the industry will mean millions of dollars would be at stake if restricted. Employment generation, dependence on taxation revenue and income from other connected sources to the nation would be substantial.

 Development of the gambling industry is directly linked to a rapid expansion of shopping centres, the entertainment industry and restaurants. It borders well with the plan to make Sri Lanka a regional trading hub.

Resistance from communists and religious extremists should be anticipated and countered. Majority Sri Lankans have repeatedly rejected these regressive elements that brought down prosperous nations in the neighbourhood. What should happen is to ensure the industry works for Sri Lanka and not the other way round.

8 Responses to “Is Legalising Gambling a Step in the Right Direction?”

  1. callistus Says:

    Dilrook your analysis is correct. Casino’s are a part of modern culture. These are attractions for the western tourists, like the amusement arcades in every holiday resort. Most people, especially the young, only go there during their holidays and it is for the fun. We are living in the modern world, and gambling is part of it.

  2. Ben_silva Says:

    Good analysis by Dilrook. I agree that the average Sri Lankan has to be kept away from gambling and owners of Gambling orgs need to be closely monitored. Adequate safeguards and safety nets may need to be provided to help people, who may be victims of Gambling. For example, we should not have people who starve their family, just to feed the gambling habit of a person. In order to survive, we need to move over to the modern 21st century, Global economy and the Global market. What is needed is a new mindset suitable for the modern world, rather than the mindset of 500 years BC. Unfortunately, modern world is tough and world today is very different to the simple society 500 years BC. There is a need to work smarter and harder, learn new skills and acquire new knowledge and develop a learning culture rather than be stuck in a time capsule 500 years BC. Religion has been mentioned and I wish to quote the views on religion:. The famed science fiction writer, Arthur C Clark, who once denigrated religion as “a necessary evil in the childhood of our particular species. He was so anti religion that he did not want any religeous rights at his funeral.
    Russell:. I regard it as a disease born of fear
    Einstein: A man’s ethical behaviour should be based effectually on sympathy, education, and social ties and needs; no religious basis is necessary
    In my view, any religion is a dangerous mind virus. Rather sadly, religion did not save Nalanda Buddhists or Buddhists in the ‘Silk route ‘
    I am not a gambler and I avoid gambling, but still need to be aware of the real world.

  3. hela puwath Says:

    Dilrook Kannangara, Callistus and Ben Silva, how many gambling addicts do you know? How many gambling, and alcohol/drug addicts have you associated closely? The evil of gambling addiction and alcohol/drug addiction is not a “religious” issue; it is a dire social and family issue.

    It is one thing to glorifly Las Vegas and its contribution to tax revenue and “employment”, but one must not forget the twin evils that accompany legalized gambling i.e., promotion of prostitution, alcolholism and drug addiction.

    It is well and fine to simply talk about “keeping the locals away from gambling”, but one must look at the reality of law enforcement and corruption in our country. The close relationships of some of the highest law enforcement officers with the underworld, and drug kingpins in the country have been exposed in recent times. Besides, some of the most powerful and wealthiest businessmen/politicians are openly running gambling empires in the country, with bookey-joints around every corner, while the law of the land says gambling is illegal (at least untill now). How do you all propose to bring about this “keeping the locals away from gambling”?

  4. Ben_silva Says:

    Reply to Hela puwath
    I do not know any drug addict or a gambling addict. But I am aware that drug addicts and gambling addicts. do exist and can caue massive problems to the society I wish to thank Hela Puwath for highlighting the serious potential problems. We certainly need a good discussion and I hope it is not too late! One way to control is, limit gambling areas to foreign passport holders only. Again I do not know if it will work!

  5. Nanda Says:

    As a Buddhist country Sri Lanka already got punishment from Kamma , that the very parliament that passed the legislation was submerged next day !

  6. mjaya Says:

    Its sad to see the government legalizing gambling. Like CEPA and allowing India to build two consulates in Hamantota and Jaffna, its a huge blunder. Las Vagas might seem high and bright on the outside, but one must see beyond the surface to see the many gambling addicts who suffer. The motive for gambling is simple, you are given the perception that you can earn a lot, real quick and real easily. But the reality is that the changes of winning are minimal. People who can’t figure this out end up becoming gambling addicts. Also Macau is the center for organized crime in China, the notorious Triads.

    Its true things like gambling, prostitution, drugs, alcohol and smoking cannot be eliminated 100%. But its a big mistake to capitalize on them. Lets put religious reasons aside. We say we are a poor country and one reason is that nearly 30% of the income of low-income groups in Sri Lanka is spend on alcohol, smoking etc. We have to spend millions to treat the illnesses caused by them. Also, we have the problem of organized crime rooted in such social evils. Its a known fact that a majority of thefts in the country are done by drug addicts.

    There is nothing different from legalizing gambling to attract tourists and the previous underground promotion of child prostitution. Also, there are plenty of other opportunities to promote tourism that are less harmful to the country and local culture. Why not promote eco-tourism?

    If everything were to be looked at at an economic sense, then its a good idea to kill off pensioners who live on taxpayers money and drain our health and welfare! Why not try this out – makes economic sense!!

    The biggest curse to this country is people who praise everything that “their people” do and criticize everything the “others” do. I see things for what they are. I support the Hambantota harbour, Mattala airport, the massive development projects initiated by this government 100% but oppose CEPA and the proliferation of gambling 100% as well.

  7. Nanda Says:

    Mjaya,
    Don’t taint your argument with nonsense.
    Pensioners do not drain our health system – this is not Australia. They are ex-public servants unlike Australia every hooligon when got old paid pension.
    Also “evil” is a religious word.

  8. mjaya Says:

    Hi Nanda
    Seems you got my point but in the wrong way….
    Any government can earn money through things such as legalized gambling, prostitution, alcohol and smoking. Economically it makes perfect sense to legalize gambling and earn from the tourist influx. But in that case when it comes to earning money where do we draw the line?

    How about legalize bull fighting or cock fighting and earn from the resulting tourist influx? If someone were to oppose this since it “harms” animals, then doesn’t gambling “harm” humans? My point on killing off pensioners is simply to highlight that point with a little bit of sarcasm.

    Just one more thing. Its wise to think about the old adage “a little bit of cow dung will spoil the whole pot of milk”. The present government should understand that in the eyes of the general public, all good things done from ridding our motherland of terrorism, building of the Hambantota harbour, Upper Kotmale, the Norochcholai coal plant, Mattala Airport etc. will simply be meaningless when compared to a single wrong decision like this.

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