Sri Lanka’s John Keells Holdings (JKH) is expected to benefit from the proposal to streamline the country’s casino industry which could pave the way for JKH to rent space at Cinnamon Life mall to a casino operator, CT CLSA Securities said in a research note.
The cabinet of ministers this week approved a proposal by Prime Minister Ranil Wickremesinghe in
his capacity as the Finance Minister to streamline the casino industry by issuing necessary orders and amendments to legislation governing the industry.
Since provisions had not been issued under the Casino Business (Regulation) Act No. 17 of 2010 the Government of Sri Lanka (GoSL) has not been able to issue licenses to entities operating in the industry resulting in the GoSL not being able to recover levies from these entities. The issuing of orders under this act would allow the Government of Sri Lanka (GoSL) to regularize the industry and recover levies due to the GoSL. Further, the Cabinet of Ministers also approved the proposal to introduce appropriate measures to introduce amendments to the Betting and Gaming Levy Act No.40 of 1988.
“We view this development as a positive for John Keells Holdings (JKH) as the issuing of licenses and regularization of the casino industry would pave way for the company to rent entertainment space to a casino operator at the retail mall of its flagship Cinnamon Life development,” CT CLSA Securities stated.
The Cinnamon Life Integrated Resort is expected to commence operations during 1H2023E in a phased-out manner. CT CLSA expects JKH’s leisure sector profitability to improve significantly with operations ramping up over FY24-25E. As highlighted in our recent JKH results update released on 06 June 2022, a key catalyst for a rapid ramp-up in earnings at Cinnamon Life would be the ability to rent out space to a casino facility at the retail mall.