By Charitha Ratwatte –

Colombo’s New Casinos: A High Risk Venture?

At the recent Commonwealth Business Forum in Colombo, the Australian tycoon who is the key investor in the much-touted ‘Iconic integrated resort’ with a casino which is to be built in Colombo was a star performer. A local newspaper quoted him as saying, “Nothing will stop Sri Lanka from becoming a top end gambling Mecca.” A profound prediction for this thrice-blessed Dhamma Dweepa!

It is difficult to access any definite information on the current status or dimensions of his proposal, especially in the context of existing law – the Casino Business Regulation Act No. 17 of 2010, which inter alia requires that the minister issues a license to a casino and that the minister specifies a designated area for the casino to operate. But it seems certain that the project is going ahead and that it has been offered some unprecedented and stunning concessions to attract the investment.

However, the project is controversial. Heads of religious organisations and other organisations that resort to religion to foster their cause and promote themselves into the limelight, have come out against it, including some rather belatedly.

The Government has made some confusing statements as to the exact details of the overall development and the concessions offered to attract the investment; also the issue of access to local people to the casino has been debated. The confusion extends to the law, one worthy says that existing casinos are legal and licensed under the law. Another worthy says it is not so!

Singaporean process

In this context one of the most sensible things was the publication in a local newspaper of the justification for two such integrated resorts with casinos to be built in Singapore presented by Prime Minister Lee Hsien Loong, at the time they were approved over there.

The Singaporean process seems to have been a model of transparency with competitive bidding and all concerned parties, including opponents on religious and social grounds, being heard and given the full facts of the proposal – unlike the Colombo Casino project, which has had much double speak, misstatements and denials, withdrawals, retractions, much more that any truthful indication of the dimensions, especially regarding the tax and revenue concessions being granted.

The Singapore case in enlightening because there are Sri Lankans around today who have actually listened to Singapore’s first Prime Minister Lee Kuan Yew saying that he would allow casinos in Singapore “over his dead body,” when he set out to create a Singapore which was a ‘first world oasis in a third world region’ in 1965.

But his son as Prime Minster has reversed this and has allowed two integrated resorts with casinos in Singapore, which bring in huge tax revenues to the Singapore Government. The projects have also created jobs and opened up the hitherto ‘prudish’ Singapore society to a more rakish attitude towards social mores, analysts have pointed out.

The Chinese, the majority of Singaporeans, are inveterate gamblers. Betting on horse racing and money games like Toto and 4D already existed in Singapore. There is a huge illegal underground betting operation on international football matches, combined with match fixing. But the profits from legal gambling is paid to the Singaporean Totalisator Board, which is authorised to use the money for charitable causes.

The revenue from the entrance fee into Singapore’s Integrated Resorts also goes to the Totalisator Board. So betting and gambling was nothing new to Singaporeans. It was already there legally and contributed to revenue.

In fact the Singapore trade union NTUC has a social centre in Downtown East Singapore which has jackpot machines that help to generate the funds to build and maintain the other family-oriented facilities in the club house. So do the Singapore Armed Forces Club Houses. These are touted as wholesome family destinations for Singaporean families.

The reasons for Prime Minster Lee Kuan Yew coming out so strongly against casinos are many. They are worthwhile for us in Sri Lanka, especially the so-called sophisticated ‘Colombians’ who support integrated resorts to look closely at.

Among them are: the fact that it its well-accepted that gambling is addictive. Gamblers steal money and neglect family obligations to find resources to gamble with. More gambling means more problem gamblers, with all the attendant negative social consequences.

It is a proven fact that unless there is stringent law enforcement and the rule of law, gambling generally and casinos specifically entail significant amounts of negative collateral damage to the social fabric; money laundering, prostitution, alcoholism and substance abuse, erosion of family values, corruption of law enforcement officials and politicians due to black money being freely available for nefarious purposes, domination by organised crime and illegal money lending are some of the factors.

Singapore’s reasons

Prime Minister Lee Hsien Loong cited a number of reasons for the integrated resort with a casino being useful for Singapore at that time of its development. It would be useful to look at these reasons and compare them with the Sri Lanka situation.

The first reason he said was that although tourism was booming in Asia, especially out of Indian and China, Singapore’s market share was dropping. The reason seemed to be that Singapore was seen to be ‘unexciting’. There were no crowd pullers in Singapore.

Sentosa Resort, cable cars, night zoos, China Town, the Science Museum, Orchard Road’s shopping malls, etc., were not enough. There are too few things that grabbed the attention of the tourists in Singapore. He cited the critical comment of Hong and Taiwanese tour operators that ‘the water in Singapore is too clear, so there are no fish’. Probably a reference to the law and order and ‘goody goody’ reputation of Singapore. An integrated resort with a casino will be a solution to this image problem. It will provide an opportunity for tourists who are looking for that kind of entertainment to access it.

The second reason was that rival locations were rapidly reinventing themselves to attract more tourists. New York was rebuilding the Word Trace Centre site, Paris has built an artificial beach along the River Seine, London was giving itself a facelift and planning to build a super casino in addition to gambling clubs which already exist, Shanghai was full of drive and energy and reinventing itself in the context of a market economy with Chinese characteristics after a long period of communist domination, Hong Kong was opening a Disneyland and planning a casino to compete with Macau, Malaysia was hosting Formula One racing and developing its city centre to attract visitors from West Asia.

The PM questioned whether Singapore was going to be part of this new world which was in competition for tourist visitors or let the world pass by. He said Singapore had to get that ‘buzz’ which attracted tourists to their competitors’ cities.

The PM reiterated the point that what Singapore was doing was building an integrated resort with all kinds of amenities – hotels, restaurants, malls, convention space, theatres, museums and theme parks. There would be just one small but essential part of the complex which would offer gambling, which would make the entire project financially viable. This will entice the investor to invest his money, devoid of a government fiscal or other incentives.

The results are impressive. The casinos in Singapore have contributed over 2.2 million S $ in taxes annually. They contribute between 1.5 to 2% to Singapore’s GDP. The casinos attract 17,000 plus visitors a day.

Sri Lanka

How do these arguments apply to Sri Lanka? Sri Lanka tourism is just emerging after 30 years of conflict. Although there is hardly any systematic promotion being done for tourism, arrival numbers are satisfactory and some say the arrivals are increasing. Sri Lanka has been referred to by many analysts as the best place to visit at this time. But tourist arrival numbers are controversial. Analysts blame the definition of who a tourist is.

The seasonal resort hotels and hotels in Colombo seem to be attracting business. But other properties are having difficulty in selling their rooms. One reason is that the industry raised its rates too much after the end of the conflict above even comparative facilities in Malaysia and Thailand. Now they are cutting prices to compete.

Tourists complain that once the temples, archaeological sites, beaches , wildlife and nature trails are done and over, there is nothing much to do. Sri Lanka is not marketing its heritage. Any other country which had wonderful living monuments like the ‘Audience Hall ‘ in Kandy or Sigiriya Rock would put on sound light shows and have live performances with actors in period costumes recalling our ancient culture. The British, Dutch, Portuguese and Kandyan Kingdom Forts located all around the island are another gold mine being allowed to gather dust. Something is being done with Galle, but the potential is huge.

Winston Wickremesinghe of Ambalangoda has recently written to a newspaper drawing attention to the potential of the dungeons under the ramparts of Galle Fort. There is a Fort in Trincomalee, the ancient port of Gokanna, said to date back to the Wijayabahu the Great, who drove out the Chola Emperors. But we have nothing like this for visitors, except the hackneyed devil dancing, magic shows, puppet shows and sleazy gambling spots.

Tourists complain that they have nothing to do in the night other than to go to the bar or night club and drink! Any other nation which had ancient living monuments which we are blessed with will enhance their attraction with live sound and light shows and other facilities to entertain the visitors. The excellent museum at Sigiriya is an example. So it is possible to argue that Sri Lanka has a million unexploited opportunities to provide entertainment instead of looking at the casino option.

Singapore is a tiny island, settled by migrants. It has virtually no history. All the attractions are of recent vintage. It is a business persons and traders city. This is what Stamford Raffles set out to create. To attract the leisure market they have to think out of the box, and whatever the negatives of gambling, which they are well aware of, they have to turn to that choice, as there is no other option. We in Sri Lanka have so many other options.

Sri Lanka’s options

The first would be a world class marketing campaign to sell the island’s potential. Such a campaign should be run and managed by the leisure industry, not by politicians, regulators, political hacks and bureaucrats. The second would be to develop all the facilities and sites to its full potential. The nature trails, the hikes, the aquatic and water sports, culture circuits, camping holidays, caravan tours, etc., are all only at initial stages of development.

The second would be accurate statistics. The industry has internationally accepted definitions, but we need a definition which will assist us to plan a national strategy and therefore statistics which would give an accurate picture of the profile of our arrivals, not lies, damned lies and statistics! Arrivals are supposed to be breaking records but hotels are offering give away deals on credit cards!

The third would be regulation and better coordination among the industry itself. Standards and procedures have to be improved and cut throat competitive pricing should cease. The top end of the market – what is known as ‘boutique hotels’ – have to have acceptable standards. Price should not be the only differential. The bottom of the pyramid, home stays and small guest facilities with a few rooms should be also regulated to safeguard the rights and responsibilities of providers as well as consumers.

Essential support services, the provision of properly trained and certified human resources for the industry, guides, drivers, hotel staff, travel agents staff, interpreters, travel and transport provision, food safety standards, etc., should also be developed.

Development of facilities to accommodate maximum numbers of flights for travellers to be able to arrive with ease and the development of more facilities for the cruise ship segment also needs attention. It would be advisable that these pressing matters which would have an immediate and positive impact on the industry should be dealt with aggressively before getting into controversial fields like provision of gaming and casino facilities, with all their collateral negatives.

Beyond gaming

It should be noted that the two Integrated Resorts in Singapore go much further than gaming. The Bay Front site is a large business and convention facility. It targets visitors who come for Meetings, Incentive Tours, Conventions and Exhibitions (the MICE market) these are high-spending tourists.

The Singaporean PM accepted that since the Bay Front is located in prime downtown Singapore, it cannot end up like a sleazy casino development. The Sentosa Integrated Resort is a family friendly resort. It attracts families and tourists who are coming for a holiday. There are theme parks, resort hotels, restaurants and shopping malls to satisfy critics who complain that there is not enough to do in Singapore on holiday.

Over and above the existing casinos in Colombo, scattered all over the city, we understand that the plan is to have an especially demarcated area in the central business district for the casinos. There are other mega developments planned for adjacent areas, like the proposed Presidential Square development and the Monaco sized reclaimed city adjacent to the South Harbour, etc. Care should be taken that a low reputation sleazy environment does not emerge around the casinos, to spoil the quality of the locality.

But at the end of the day, it has to be conceded, that the reality is that there would be a segment of the tourist market, which would be attracted by gaming facilities. The point that is being made is that we should go all out to fully exploit  all the other choices and opportunities for providing facilities for tourists , which with Sri Lanka is well endowed with and that Singapore lacks, before taking the casino option and making Sri Lanka a ‘gamblers’ Mecca’.

Given the negatives inherent in gaming environment, this is the sensible thing to do. Taking a quick, short and dirty short cut to attract tourists with casinos and the collaborative negative consequences is a foolish option. The sensible thing would be attend to all other aspects which are holding back the full flowering of the leisure industry in Sri Lanka, before going for a casino option, which will have unavoidable negative social consequences – especially when the unprecedented tax concessions given to attract the investment, in terms of the Strategic Development Projects Act No. 14 of 2008, negates any positive impact upon the national revenue numbers.

Mitigating negative social outcomes

The Singaporeans took the casino option because they had no other choice to keep themselves competitive in the leisure market and with the intention of taxing the business and increasing national income, which they have achieved in spades, beyond their wildest expectations.

Further, they went into this well knowing the potential for negative consequences and took steps to mitigate these. PM Lee Hsien Loong referred to the proposals to limit the negative aspects of gambling on Singaporeans in his speech.

The first limitation of access to locals, both Singaporeans and Permanent Residents, was the cost of the entrance ticket, the price limitation. They have to pay Singapore $ 100 a day or $ 2,000 a year to enter. Secondly, Singapore implements a system of exclusions. Those in financial distress or on social assistance will not be allowed to enter the casino. Singaporeans can also request that they themselves or a close relative to be excluded.

Thirdly, casinos are barred from extending credit facilities to locals gambling in the casino. Fourthly, all the income from the entrance fees will be directed to charity through Singapore’s Totalisator Board, which regulates other forms of gambling. Fifthly, Singapore has set up a National Council on Gambling to review policy and counsel and treat pathological gamblers.

Every religion and philosophy for life which is followed in Sri Lanka condemns gaming. The responsible leadership of all the institutional representatives of these religions and philosophies have expressed strong reservations on the Government’s proposal to allow these new gaming resorts. But at the end of the day, the reality is that gambling, betting on horse races, lotteries and other sundry types of gaming are alive and well in Sri Lanka, whatever the social stigma which attaches to the sector.

It is conceded that finally the issue is one of personal choice. But surely the State has a responsibility to avoid all together or at least mitigate the negative social outcomes when permitting activities such as gaming? Further, if the choice is made, with the justification of further enhancing the attractions for foreign tourists, surely a prior step should be to fully develop all other existing options to extract the valuable dollars from the visitor, than go down a road which has unavoidable negative consequences?

In an environment like Singapore, in which policing, law enforcement and the rule of law are of a high standard, these negatives may be controllable, but in an emerging third world populist democracy like ours, one wonders. The risks are very high.