MONETABRIEF – Any unlicensed online casinos in Sri Lanka whether they are in the Port City or outside are illegal unless they get a license from the newly set up Gambling Regulatory Authority, regulatory officials said.

Criminal casinos targeting mainly East Asian nations where gambling is illegal which were ejected from Philippines and Cambodia have shifted to Sri Lanka and a number are operating out of Port City BPOs.

Central Bank Governor Nandalal Weerasinghe said he was not personally aware of online casinos operating out of Port City but the Gambling Regulatory Authority has blocked some foreign websites.

"Any gambling licenses should come under our regulatory authority, that's my understanding, whether within the Port City or outside the Port City," he said.

Illegal

The GRA was still working on the regulations, he said, referring the matter Sri Lanka's Financial Intelligence Unit, which operates under the central bank.

"To offer any online gambling in Sri Lanka, they need to establish a company in the country, and also they need to obtain a license to offer online gambling to our people," Subhani Keerthiratne, Head of the FIU which is in charge of countering money laundering.

"So the gambling regulatory authorities are in the process of finalizing the regulations, but still, as per the Act, because Section 18 specifically requires anyone to offer online gambling to take a separate license for that. So it's illegal."

The Port City and Board of Investment gaming operations inside BPOs are mainly targeting offshore customers, though advertisements are appearing around Colombo promoting several online casinos.

OPEN SEASON : A billboard advertising an online casino portal in Sri Lanka's capital Colombo. Visitors who go to the portal are re-directed to a telegram channel. BMZY is a domain linked to a gaming syndicate going by the name 'White Horse Manor'

Some BPOs are providing support for so-called 'white label' gaming software for criminal gambling networks, as well as marketing, customer support, recruitment and training.

Criminal Gaming

Some of the companies that have shifted to Sri Lanka are former Philippine Offshore Gaming Operators (POGOs) which had so-called International Gaming Licenses (IGLs).

The POGOs were shut down by current President Ferdinand Marcos junior.

Others have come from Cambodia, as that country also cracked down on online casinos and scam compounds.

Criminal casinos and scamming hacking networks are run by transnational organized crime (ToC) networks in East Asia, according to the UN Office on Drugs and Crimes.

A United Nations report noted that POGO or International Gaming Licenses, were a key loophole that criminal networks used to target countries where gambling is illegal.

"POGOs themselves represent a loophole, providing online gaming primarily to gamblers from jurisdictions in which gambling is illegal," a report compiled by the Office of the United Nations High Commissioner for Human Rights on online cyber crime and trafficking said.

The POGOs were shut, following international pressure, their assets seized and the remaining online casinos in the Philippines are now only allowed to sell to customers within the country.

In Sri Lanka the Gambling Regulatory Authority will inquire into the matters an official said.

"As per the Act, Gambling Regulatory Authority Act, there is a requirement for anyone to offer any service, like software services, they still need to get a license for that," Keerthiratne said, who serves as an ex-officio member of the Gambling Regulatory Authority.

"So there are requirements, once the Gambling Regulatory Authority is fully operationalized, they will definitely look into this issue."

In the past, BPO/KPO operations in Sri Lanka provided back office services, accounting, equity analysis and call centres for ordinary companies running legal businesses.

As a result, there was no additional oversight required for Sri Lanka authorities to waste time to keep track of who the final clients of BPO firms were or what they were doing.

Harsha de Silva, Chairman of Sri Lanka Parliament's Committee on Public Finance has raised a red flag on online casino operations, many months before the extent of illegal online casinos came to light.

At the most recent CoPF meeting with the Port City Economic Commission, de Silva pointed out that both China and Vietnam had issued statements on cross border illegal gambling in Sri Lanka.

He said there were pressing questions that needed to be answered for more than one reason and told the Port City to prepare soon.

"One is financial stability, another one is money laundering," de Siva warned.

"And we do not want to get a bad name."

Exclamations of surprise could be heard when Port City Economic Commission said 14,300 visas had been issued to foreign staff.

Junkets, Exchange Controls and Scamming

Criminal online gaming had mushroomed during the Covid pandemic among casino compounds in East Asian special economic zones that suddenly lost visitors who used to come from countries where gambling was illegal as the pandemic halted travel.

The scam compounds in Esat Asia had originated out of two state controls.

One was the complete ban on gambling that kept legal, regulated companies out of the business, and the other was exchange controls (capital controls) that resulted from soft-pegged central banks with policy rates.

Some of the casinos compounds in East Asia were run by junket operators from Macau, were already involved in transferring money for clients from countries with soft-pegged central banks and exchange controls and were adept at money laundering also.

"Because of the historically close links between junkets, which served as credit providers for customers seeking to evade capital controls and quotas, and organized crime, which have traditionally provided corresponding debt collection services, these profits supported a range of other criminal enterprises requiring money laundering or money transfer services, as well as seemingly legitimate investments," notes a report by the UN Office for Drugs and Crime on Casinos, Money Laundering and Underground Banking.

The online casinos in loosely regulated special economic zones run by junket operators, which were already involved in money laundering had then branched out into other cyber frauds like hacking and scamming.

"Unregulated and underregulated online casino platforms run by junket operators, while profitable in and of themselves, also serve as a useful channel of credit settlement between junkets and their clients, and have been observed to be misused extensively to comingle and disguise proceeds of crime as legitimate online gambling profits," the UN report said.

"At the same time, many illegal online casino in Southeast Asia have diversified their business lines into cyber fraud operations, with extensive evidence of infiltration of organized crime within casinos and SEZs for the purposes of concealing various illicit activities.

"Most, if not all, of the largest junket operators have established these operations, with smaller junkets and online platforms acting as customer referral agents where further money laundering and layering can take place.

Sri Lanka has seen a proliferation of scamming and hacking activities over the past year or two.

The first POGO-style murder and kidnapping has also taken place from the Port City.

Deceptive Recruitment

Criminal syndicates are effectively trafficking young people from East Asia to Sri Lanka under false pretenses with recruiters working for Port City companies misleading them that offshore casinos are legal in Sri Lanka as opposed to Cambodia and the Philippines.

The gambling firms are targeting friendly countries, especially China, Vietnam and a number of other East Asian countries.

Recruiters working for TT88, an online casino ring, are now expanding in Sri Lanka and recruiting staff to hit Vietnam offering 1300 dollars a month.

South Asian workers are offered half the pay.

Some companies are also offering payment in crypto according to online recruitment advertisements.

However, USDT or rupees are not approved currencies for the port city.

Meanwhile Governor Weerasinghe says USDT is not legal to make payments in Sri Lanka. The central bank has a monopoly in money outside of the Port City.

Enforcement

Governor Weerasinghe also suggested that like Sri Lanka's Gambling Authority blocking some foreign websites recently, other countries could also do so.

However China has been doing that for years and criminal gaming firms use a large number of mirror sites to dodge internet bans.

Port City BPOs also recruit SEO specialists to boost the ratings of new websites as they play hide and seek with anti-cyber crime police in East Asian nations.

As a result countries like China are now requesting authorities in friendly countries to nip criminal casino activities at their source.

"The position of the Chinese government on cross-border gambling is consistent and unequivocal: Chinese capital is forbidden to invest in overseas casinos, Chinese citizens are forbidden to participate in the operation of overseas casinos, and overseas casinos are prohibited from soliciting Chinese citizens to gamble,"China's embassy in Colombo said in a statement.

"Tens of thousands of Chinese citizens have suffered property losses and even personal harm as a result of cross-border gambling.

"Such activities may also give rise to other crimes and illegal acts, including fraud, money laundering, kidnapping, unlawful detention, human trafficking, illegal border crossing and so on,"

"Since the beginning of this year, in response to the growing trend of individuals involved in online gambling, telecom fraud, and related criminal grey and black industries relocating from other countries to Sri Lanka, China and Sri Lanka have intensified their joint law enforcement efforts,"

"The Chinese Embassy has strengthened communication and coordination with Sri Lanka relevant ministries and departments, including Foreign Affairs, Finance, and Public Security, while the law enforcement agencies of the two countries have continued to deepen practical cooperation.

"A number of Chinese nationals involved in fraud-related crimes have been handed over to the Chinese side, producing a strong deterrent effect. Chinese public security authorities are making every effort to advance the investigation and handling of the relevant cases." (Colombo/Oct16/2026)