Inside Asian Gaming

inside asian gaming September 2014 36 The government of Sri Lanka wants tourism to become the island nation’s primary generator of foreign exchange earnings over the next three years and is maneuvering resort casinos into the mainstream of that push. Tourist arrivals surged 46% in 2010, the first full year of peace following the defeat of an armed revolt by the island’s ethnic Tamils that had battered the country for a generation. Arrivals last year were up 26.7% to 1.27million. And the government has given the green light to three casino resort projects: the US$350 million Crown Colombo spearheaded by James Packer and local partner Ravi Wijeratne; an $850 million resort by Sri Lanka’s largest publicly traded company, John Keells Holdings; and the $350 million Queensbury proposed by Vallibel One, owned by one of Sri Lanka’s richest men—perhaps the richest—Dhammika Perera. The future of Crown’s project now looks uncertain, but Mr Perera is already the biggest casino operator in the country and looks set to push ahead with Queensbury. The handful of small casinos currently catering to the Colombo tourist trade operated for years as “recreation clubs” before their existence was formally recognized by legislation passed in November 2010. Mr Perera owns three of the four that are officially sanctioned—the ones registered with the country’s Inland Revenue Department to pay gaming levies. All are located in Colombo, and the biggest, Bally’s, has 80 table games (his Bellagio has 40 and his MGM Colombo another 40). Following the transfer of their de facto licenses to larger properties, including the 40-story, 500-room Queensbury, they will be gradually phased out. Mr Perera is gifted with a keen ability to analyze investments. According to a recent profile in Forbes , “Using mathematical models that he’s developed over the years, he’s a numbers guy who hunts for undervalued assets and then swoops in. Once he has the right managers in place, he gives them free rein.” Back in 1999, Mr Perera developed a 20-year plan to become the country’s leader in each of 12 sectors—tourism among them—by 2019. The 46-year-old tycoon’s empire now boasts 23 listed companies that account for 8% of all companies traded on the Colombo Stock Exchange and dozens of private ones. His reach extends to Thailand, Indonesia, Japan, the UK and elsewhere, and his companies employ some 62,000 people. In anticipation of the end of the civil war, he began investing in the tourism sector in 2000 and now has a number of luxury resorts and hotels with 600 rooms in total and another 1,200 under development. Sri Lanka’s proximity to India bodes well for Mr Perera’s Queensbury, offering easy access to the subcontinent’s increasingly affluent and gambling-hungry millions. According to Manav Thadani, who heads the Indian office of hospitality consulting firm HVS, Dhammika Perera Chairman and Managing Director Vallibel One “Right now, if you look at the tourist arrivals into Sri Lanka, Indians dominate that, and the thought process is that that number could go up significantly if they had casinos because casinos are something which currently are prohibited in India.” The upcoming resorts could also help boost tourism, particularly at the high end, simply by addressing the country’s shortage of quality tourist accommodation. Perennially rated one of the world’s top destinations by the likes of Lonely Planet , Conde Nast and The New York Times , the “Pearl of the Indian Ocean,” as Sri Lanka is known, offers no end of delights for the traveler—beaches, tropical forests, lush highland valleys, waterfalls, botanical gardens, sprawling tea plantations, centuries-old temples, ornate colonial-era landmarks, 15 national parks in all, eight UNESCO World Heritage sites, even wild elephants—but what it doesn’t have is anywhere near enough tourist-caliber hotel rooms to accommodate the government’s target of 2.5 million visitor arrivals by 2016. “A safe pair of hands”—that’s how the head of equities for Echo Entertainment’s largest investor, Sydney-based Perpetual Limited, characterized Matt Bekier when he took the helm as ASX-listed Echo’s chief executive in April. Certainly Mr Bekier hinted as much after taking over from Las Vegas industry veteran John Redmond, who resigned in January. ‘’Ninety-five percent of the direction that we have set out with John will be the same,” said the long-time Tabcorp CFO, who moved to Matt Bekier Managing Director and CEO Echo Entertainment