In Sri Lanka, land-based casinos, bookmaking and state lotteries are legal and licensed, but online gambling long sat in an unregulated grey area. That is now changing: the Gambling Regulatory Authority Act of 2025 (Act No. 17 of 2025) came into operation on 1 December 2025 and creates a single regulator, the Gambling Regulatory Authority (GRA). Officials have targeted 30 June 2026 for fully establishing the GRA as an operational institution licensing both physical and digital gambling. Cryptocurrency is not legal tender and is officially discouraged, so crypto gambling remains unregulated with blocked payment rails. Treat any offshore online site as unlicensed until the GRA’s digital-licensing regime is live.

Gambling in Sri Lanka is best described as legal-but-restricted and mid-reform. For decades the sector ran under the Betting and Gaming Levy Act, No. 40 of 1988 and the Casino Business (Regulation) Act, No. 17 of 2010, which covered land-based venues and licensing. Online gambling was never expressly licensed, leaving locals who used offshore sites in a legal grey zone. The 2025 Act repeals the older Betting on Horse-Racing Ordinance, Gaming Ordinance and the Casino Business (Regulation) Act and consolidates oversight under the GRA.

Regulator and licensing

The Gambling Regulatory Authority (GRA) is the new single regulator for casinos, bookmaking, lotteries and digital gambling. Under the Act, operators must be properly incorporated, meet capital and fit-and-proper requirements, and hold the relevant licence. Importantly, the law defines and separately licenses digital gambling (interactive gaming, internet, mobile and social gambling), and requires digital operators to hold a dedicated licence from the Director-General, with software specifications, third-party compliance certification and data-protection measures.

Land-based casino licensing has also tightened. Large integrated resorts can be granted long-term licences (City of Dreams Sri Lanka opened in Colombo in August 2025 under a 20-year casino licence via a Melco Resorts and John Keells Holdings venture). Existing operators such as Bally’s, Bellagio and Casino Marina are transitioning to GRA oversight.

Licensed vs offshore

TypeStatus in 2026
Licensed land-based casinos (Colombo)Legal, GRA-regulated
National & Development LotteriesLegal, state-run
Licensed horse-race bettingLegal
Online/offshore betting sitesNot yet licensed under the new regime; historically a grey area
Crypto casinosUnregulated; payment rails officially blocked

Until the GRA’s digital-licensing regime is fully operational, any online site targeting Sri Lankans is effectively unlicensed offshore, with no local consumer-protection backstop if such a site refuses to pay.

Payment methods locals use

Domestic transactions must be settled in Sri Lankan rupees. Common rails include debit/credit cards, bank transfers and mobile-money/e-wallet apps. However, the Central Bank of Sri Lanka (CBSL) prohibits banks and card issuers from processing cryptocurrency transactions under directives issued pursuant to the Foreign Exchange Act, and using cards for crypto purchases is banned. Foreign-currency gambling payments generally require compliance with exchange-control rules.

Crypto gambling status

Crypto occupies a legal grey area. It is not legal tender, not a protected asset class, and not permitted for everyday payments. The CBSL has repeatedly warned that no regulatory safeguards exist for users and has not authorised any crypto exchange, mining or advisory business. A dedicated virtual-asset framework was still under development as of 2026, but crypto gambling itself remains outside any licensing regime.

Tax on winnings

A common misconception is that Sri Lanka does not tax gambling winnings. In fact, under the Inland Revenue Act, a 10% withholding tax applies to winnings from lotteries, betting or gambling where the payout exceeds LKR 500,000 (whether paid in cash or in kind); winnings at or below that threshold are exempt.

Operators carry a much heavier burden. The betting-and-gaming gross collection levy rose from 15% to 18% and the resident casino entry levy doubled from US$50 to US$100 (both from 1 January 2026), and the income tax rate on betting-and-gaming businesses increased from 40% to 45% (effective 1 April 2025). These rates are changing quickly, so verify current law before relying on them.

Safer gambling and help

If gambling stops being fun, help is available. Sri Lanka Sumithrayo’s Mel Medura programme in Colombo now addresses behavioural addictions including gambling and offers free, confidential support: 011 2 694 665. Sri Lanka Sumithrayo (a Befrienders Worldwide member) also provides trilingual emotional support on 011 2 692 909 / 011 2 683 555 / 011 2 696 666.

18+ only. Gambling can be addictive. Play only what you can afford to lose, and reach out for help if it becomes a problem.

Sources