Sri Lanka’s Casino Revolution & India’s Tax Exodus: How South Asia’s Gaming Map Is Changing

Introduction

South Asia’s gaming and broader casino landscape is at a tipping point in history. On the other hand, Srilanka is going international with City of Dreams Colombo, the region’s first truly integrated resort. At the other end, India—despite all of its promise—is crippled by state prohibitions, exorbitant taxes and fewer and fewer investors and operators who may assist.

The result? The most sensational impact was probably the sea-change in tourism of the gaming trade and investment capital moving from India — which hitherto had been a power-house for gambling destinations — toward Southeast Asian hubs like that of Manila, Sri Lanka, with Thailand now catching up. And simultaneously, in India, it is the unregulated underground games sprouting up silently, carrying along predatory behaviour and risky legal implications.

In this article, we take a look at what is driving this shift, how tax and legal realities in India are pushing it along, and why the future of South Asian gaming tourism might just lie outside India’s borders.

Further Read Bangkok Blinds Up: WPT Prime Ignites Thai Poker Scene

India’s Casino: Booming in Goa, None on the Mainlands.

The sheer size of the demographic dividend, increasing disposable incomes and growing digital adoption, along with an inclination for a lifestyle that represents lavishness and immaculate gaming setups, makes the case for a land-based casino presence legitimate. Goa remains India’s gaming capital – though there are also some new world-class establishments on their way (for example, an upgraded Deltin Royale in 2025).

But outside of Goa and Sikkim, it’s a very different story. The majority of Indian states remain averse to real-money gaming, many issuing complete bans on both games of chance and — in some cases — even games of skill.

The Patchwork of State Bans (2025)

Tamil Nadu’s Regulatory Blitz

Tamil Nadu is a textbook example of draconian gaming regulation. However, the rules by Tamil Nadu Online Gaming Authority (TNOGA) went a step further than mere bans:

• Mandatory KYC and Aadhaar-based verification
• Two-factor authentication for all real-money gaming accounts
• Strict spending limits: daily, weekly, and monthly caps, with pop-up transaction warnings
• Time-based “gaming curfew”: no play between midnight and 5am
• Skill game uncertainty: Poker and rummy remain in legal limbo after court rulings and legislative pushback

Operators find themselves straddling unnecessarily expensive and burdensome compliance obligations, which equally irritate end-users by making them feel ‘over-surveilled’.

Double Whammy Tax Burden: GST + TDS

Regulation is not the sole factor hindering the growth of India’s blockchain sector, and the prevailing “hurry up and wait” mindset must change—ideally, immediately. We cannot overlook the significance of the DSIR, which includes a tax break for research. The current effective levies—

• 28% GST on deposits and 30% TDS on winnings—combine to create a situation where:
• 50-60% of potential returns are lost even before accounting for the house edge or tournament fees.
• To casual gamers, this quickly drains the fun and the bankroll — and most don’t stick around for long.
• Serious players are cashing in their chips in India and boarding flights to Colombo, Manila, or Bangkok — where their winnings aren’t eaten alive before they even hit the table.

The rationale behind this tax regime has led many Indians to deposit their bankrolls overseas or engage in underground gambling, driving a trend of gaming migration.

Exodus: Capital flows to a new home

India’s challenging environment is not just hitting players — investors are voting with their bucks:

• Private equity and venture funding in Indian gaming operators is down 58 percent since 2023.
• MPL, Pocket 52 and TradeX have either quit or downsized operations on the back of state bans and high taxes
• Funding marketing spend and moving to international expansion costs even for well-known brands

Where is this capital going? Enter Sri Lanka, Manila and soon Thailand — better laws, more market-friendly taxes and a fresh pedigree of investment-friendly governments.

Unfolding the Dark of Underground Gaming In India

Legitimate operators are stepping back while underground and unregulated gaming is flourishing, whether in brick-and-mortar houses or through private online channels.

Why Players Go Underground:

• No taxes or KYC requirements
• Higher prizes and withdraws immediately
• Higher stakes and limits

The Risks:

• Predatory collecting strategies – Coercing money through intimidation, harassment or worse.
• Dispute resolution — There is not one true record of the games, which means that the rules can be rewritten mid-game, and you can cheat your way through this process if nobody is looking.
• Unethical game management — rigged decks, collusion, fudged RNG a part of the growing pains.
• Game” Money Laundering – Players are unknowingly involved in illegal financial transactions.

A “tax-free paradise” in fact is a high-risk natural environment that can ruin bankrolls and even reputations overnight.

Southeast Asia: The Regulated Alternative

While India struggles with self-inflicted wounds, Southeast Asian gaming hubs are seizing the opportunity.

Sri Lanka: The New Magnet for Indian High Rollers

• City of Dreams Colombo offers luxury accommodation, world-class gaming floors, and integrated entertainment
• Proximity to India with direct flights from major cities
• Clear licensing and regulatory oversight

Manila: Still the Regional Leader

• 26% YoY growth in GGR in 2025
• Liberal tax environment and investor-friendly policies
• Hosts major international poker tournaments and high-stakes cash games

Thailand: The Rising Contender

• Recently lifted poker restrictions and positioning itself as an eSports-like regulated poker hub
• Integrated resorts in planning stages
• Strong tourism infrastructure

India’s Missed Opportunity: The Casino Tourism Paradox

Despite its demographic and economic advantages, India’s casino tourism is limited to “islands of legality” like Goa and Sikkim. Expansion to other regions is stalled by:

• Political resistance to gambling liberalization
• Infrastructure gaps outside key tourist states
• Slow regulatory processes in states like Daman

Meanwhile, countries like Sri Lanka are rolling out the red carpet for the very tourists and investors India is pushing away.

The Future Map: Where Players and Capital Will Flow

If current trends continue, the market will split into three segments:

1. Outbound Gaming Tourism – High rollers and mid-tier players traveling to Colombo, Manila, Bangkok.
2. Underground Domestic Games – Risky, unregulated spaces attracting those unwilling or unable to travel.
3. Shrinking Regulated Pockets – Goa and Sikkim serving a limited domestic base.

The balance of power in South Asian gaming is clearly tilting toward Southeast Asia.

Conclusion: India at a Crossroads

India’s gaming industry stands at a pivotal moment. Without unified, modern regulation and a rational tax framework, the country will continue to lose both players and capital to foreign markets and unsafe underground networks.

Sri Lanka, Manila, and Thailand are not waiting. They are actively marketing to Indian players, offering safety, transparency, and better value. If India does not evolve, it risks being permanently sidelined in the very market it should dominate.

For operators, players, and investors, the message is clear: follow the opportunity—and watch the regulatory weather. In South Asia, the casino revolution will not wait.

Sources

Sri Lanka’s Integrated Resort Launch

• The City of Dreams Sri Lanka casino is officially scheduled to open on August 2, 2025, spearheaded by Melco Resorts & Entertainment in collaboration with John Keells Holdings. GGRAsiaAdaderana BizYogonet
• This $1.2 billion integrated resort stands as South Asia’s first of its kind, featuring the luxury Nüwa hotel, shopping mall, MICE facilities, and gaming floors. Travel Trade JournalAdaderana Biz

India’s Tax Environment on Online Gaming

• The Indian government is enforcing a 28% GST on all online gaming stakes, treating them akin to gambling transactions. This stance was clearly communicated to the Supreme Court, emphasizing broad legal classification. The Economic Times
• In addition to GST, a flat 30% TDS on net winnings applies across all winnings, after previous threshold exemptions were removed in April 2023. The Times of IndiaBDOTaxBuddy.com

Why These Are Valuable

Sri Lanka’s Casino Launch

1. https://www.ggrasia.com/city-of-dreams-sri-lanka-casino-to-open-on-august-2
2. https://bizenglish.adaderana.lk/city-of-dreams-sri-lanka-to-launch-on-2nd-august-2025-a-landmark-in-south-asian-tourism-and-luxury
3. https://www.yogonet.com/international/news/2025/06/27/109583-city-of-dreams-sri-lanka-to-open-on-aug-2-with-casino-luxury-hotel-and-retail-complex
4. https://traveltradejournal.com/south-asias-first-fully-integrated-resort-city-of-dreams-sri-lanka-to-open-this-august

India’s Gaming Tax Regime
5. https://economictimes.indiatimes.com/news/india/online-gaming-equals-gambling-taxable-at-28-gst-centre-tells-supreme-court/articleshow/120904482.cms
6. https://timesofindia.indiatimes.com/blogs/voices/impact-of-tds-and-gst-on-the-online-gaming-industry
7. https://www.bdo.in/en-gb/insights/blogs/bad-beat-online-gaming-subject-to-both-28-gst-and-30-tds-and-applies-to-foreign-providers
8. https://www.taxbuddy.com/blog/tax-on-online-gaming-in-india