Scam Networks Complicate Sri Lanka’s Gaming Push

Sri Lanka’s effort to build a regulated gambling market is unfolding at the same time as a growing wave of illegal online fraud operations has moved into the country. The shift is creating an awkward backdrop for the island’s attempt to position itself as a legitimate gaming destination.

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Growing Cybercrime Pressure

According to Police spokesman Fredrick Wootler, over 1,000 foreigners, largely from China, Vietnam, and India, were arrested due to cybercrime activity this year. This was more than double the number recorded last year at 430, with the police conducting massive raids in different districts.

For example, during an overnight raid in Galle and Matara, 221 arrests were made, whereas 280 were arrested in a Colombo raid. In one instance, a March raid in a compound alone saw 135 Chinese nationals arrested. Wootler said police are now receiving daily tip-offs about such activity.

Fraud Models Mirror Gambling

The operations being uncovered are familiar across the industry, with police and observers pointing to pig butchering schemes, rigged betting platforms, and fake cryptocurrency investments. These scams target victims across Asia in multiple languages and are being built to resemble gambling products rather than conventional casinos.

That makes the timing especially difficult for Sri Lanka, which is trying to license real gambling activity while criminal networks are using the same sort of digital and physical infrastructure. The article says these groups are not building casinos, but instead are creating convincing copies of gambling products in a market that is trying to regulate the genuine version.

Regulatory Race Continues

Sri Lanka passed the Gambling Regulatory Authority Act in 2025, legalising online betting and creating a single regulator for casinos, online platforms, and sports betting. The new authority, or GRA, is expected to be fully operational by 30 June 2026 and will have a mandate that includes FATF-aligned AML and CTF compliance.

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The country is also trying to position itself as a premium gaming destination through City of Dreams Sri Lanka, the US$1.2 billion Melco-John Keells integrated resort that opened in August 2025. Melco chairman Lawrence Ho has described the market in terms of India’s Macau pitch, while Sri Lanka has also been chasing 500,000 Indian tourist visits this year to support that strategy.

Criminal Networks Follow Opportunity

Factors that make Sri Lanka appealing to legal businessmen are also becoming favorable to criminal gangs, notes the report. The country offers easy access tourist visas for citizens of over 40 nations, fast internet connections, and cheap rental costs, enabling crime syndicates to settle in beachside villas and business complexes in Colombo.

China seems to recognize the trend. Beijing’s embassy in Colombo informed that an increase in illegal activities could be noticed following crackdowns in Cambodia, Myanmar, and the UAE, and promised to cooperate more with Sri Lanka in matters of law enforcement. In its 2026 annual report, the UN claimed that at least 300,000 people have been trafficked to scam resorts in Southeast Asia, with the network now targeting Sri Lanka.

Security Concerns Ahead

Authorities are also investigating whether foreign syndicates were behind a recent cyberattack on the Sri Lankan treasury that caused about US$2.5 million in losses. The investigation suggests that the groups now operating on the island may be involved in more than consumer fraud alone.

For operators and investors watching Sri Lanka’s gaming plans, the picture is clear: regulatory reform and criminal displacement are arriving together. The GRA now has until June to show that it can act as a credible licensor, while also keeping the market clean enough to draw serious operators.

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Source: Asia Gaming Brief