Sri Lanka finance committee flags rapid rise of illegal gambling
Sri Lanka’s Committee on Public Finance (COPF) has raised fresh concerns over the rapid expansion of illegal online gambling, warning that delays in introducing dedicated regulations are allowing offshore operators to strengthen their presence in the country.
Speaking in Parliament, COPF chairman Harsha de Silva (as depicted in the featured image) said the absence of a proper legal framework for online gaming has created significant regulatory gaps, particularly as digital gambling continues to attract younger users.
According to de Silva, the country’s existing casino laws were never designed to regulate online gambling. And so, authorities have very limited direction as overseas operators continue targeting Sri Lankan players. He also revealed that more than 40 payment channels are currently being used to fund online gambling activity, making enforcement increasingly 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.
Slow pace of reforms
The chairman also questioned whether regulators have sufficient oversight of these payment systems and criticised the slow pace of reforms. He noted that while the head of the proposed Gaming Regulatory Commission had previously suggested that new online gaming regulations could be introduced by November, those measures have yet to be finalised.
De Silva also expressed frustration over the response from Sri Lanka’s Central Bank, saying the COPF had not received satisfactory answers to several questions submitted earlier this year regarding financial oversight of online gambling transactions.
He also called on lawmakers to move faster in approving the country’s pending anti-money laundering (AML) and counter-terrorist financing (CTF) bills. According to de Silva, stronger financial safeguards are essential to stop illegal gambling operators from taking advantage of gaps in the current system.
His remarks come at a time when Sri Lanka is already moving towards a more structured gambling framework. Over the past year, the government has approved legislation to establish a single Gambling Regulatory Authority (GRA) that will oversee online gaming, land-based casinos, offshore gambling and gaming activities within Colombo Port City.
Once the regulator is fully operational, it will be responsible for licensing operators, enforcing AML and Know Your Customer (KYC) requirements, promoting responsible gambling and monitoring compliance across the industry.
Govt. hopeful of iGaming expansion
Earlier this year, the government also signalled its ambition to position Sri Lanka as a regional hub for gaming and digital services. Speaking at the Global Game Connect (GGC) 2026 summit in Colombo, Deputy Minister of Industry and Entrepreneurship Development Chathuranga Abeysinghe said the government was committed to supporting the industry’s long-term growth.
He described gaming as more than just an entertainment business, saying the sector could drive investment, tourism, technology and digital innovation across the country.
Abeysinghe also highlighted projects such as Colombo Port City, which is expected to attract international technology companies and gaming businesses looking to establish regional operations. However, de Silva’s latest comments suggest lawmakers believe regulatory implementation is not moving quickly enough.
While the government has outlined an ambitious vision for a regulated gaming industry, concerns remain that delays in finalising online gambling rules could allow illegal operators to expand further before the new oversight framework is fully in place.
With regulatory reforms, AML legislation and the Gambling Regulatory Authority all progressing simultaneously, analysts hope that the coming months will have a crucial role in determining how Sri Lanka balances industry growth with stronger consumer protection and enforcement against illegal online gambling.
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