• Sri Lanka has implemented tax hikes for the betting and gaming sector, effective from 1 January 2026.
• The Casino Entrance Levy for Sri Lankan citizens has doubled from $50 to $100.
• The Gross Collection Levy on gaming operators has increased from 15% to 18%.
• These measures were codified in the Betting and Gaming Levy (Amendment) Act, No. 25 of 2025.
• The tax hikes are part of a broader push to formalise the sector, alongside the creation of a new Gambling Regulatory Authority.

Doubles Entry Fee to Curb Local Play

Sri Lanka’s Inland Revenue Department (IRD) has confirmed that new, stricter fiscal measures for the betting and gaming sector are now in force. As of 1 January 2026, the cost for Sri Lankan citizens to enter a casino has doubled.

The Casino Entrance Levy (CEL) has been raised from $50 to $100 per person. The IRD notice clarifies that operators are legally obliged to collect this fee directly from local patrons upon entry, payable in either US dollars or the equivalent in Sri Lankan rupees.

This sharp increase effectively raises the barrier to entry for domestic players, a common regulatory tool used to limit local participation while keeping the market attractive to foreign tourists, who are typically exempt from such levies.

Operator Tax Hikes to Boost State Revenue

Alongside the consumer-facing fees, the government has increased the tax burden on gaming businesses. The Gross Collection Levy, a tax on the turnover of betting and gaming operators, has been lifted from 15% to 18%.

This higher rate applies to any business whose monthly gross collections exceed LKR 1 million (approx. $3,228). The IRD stated that "Every Betting & Gaming Business" operating within the regulated framework must adhere to the new rate immediately.

The legislative basis for these changes is the Betting and Gaming Levy (Amendment) Act, No. 25 of 2025, which was certified by Speaker Dr Jagath Wickramaratne on 17 December 2025 following parliamentary approval earlier that month.

Expert Analysis: Fiscal Discipline Meets Regulatory Reform

These tax hikes are not happening in a vacuum; they are part of Sri Lanka's post-crisis economic recovery strategy. Following the economic collapse of 2022 and subsequent IMF bailouts, the government is under immense pressure to widen its tax base.

The decision to tax Gross Collections (turnover) rather than Gross Gaming Revenue (GGR) (profit) at 18% is a significant burden for operators. In many jurisdictions, a turnover tax is considered punitive because it taxes money that is eventually paid back to players as winnings. However, for the Sri Lankan government, it guarantees a steady stream of revenue regardless of operator profitability.

Furthermore, these fiscal moves are a precursor to broader structural reform. The government is currently establishing a dedicated Gambling Regulatory Authority (GRA), expected to be fully operational by June 2026. This body will likely enforce these new levies rigorously, moving the sector away from its historically loose oversight model towards a formalised, revenue-generating pillar of the tourism economy.

Sources

• Sri Lanka Ministry of Finance

Why This Matters

iGaming Times analysis: Higher casino taxes combined with doubled local-entry fees is the structural design choice between fiscal-yield-from-locals and tourism-led-revenue. Sri Lanka pricing local access materially higher signals the policy is consciously redirecting the casino product set toward inbound-tourism positioning, which over the medium term shapes how operator marketing and product mix evolves on the ground. Hong Kong and Singaporean tourism flows are the demand-side variables to watch.

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