Melco Resorts & Entertainment Limited, a comprehensive resort operator, has officially entered the gambling industry in Sri Lanka, investing 5 billion rupees (approximately 130 million Hong Kong dollars) to obtain a 20-year casino license in the country.
According to Melco's latest annual financial report, the casino license has been approved and will officially take effect from April 1, 2024. The Sri Lankan government has granted the license to Melco's subsidiary, Bluehaven Services (Private) Limited, which plans to operate the casino at the integrated resort "City of Dreams Sri Lanka" in the capital, Colombo.
According to accounting standards, Melco has recorded the license as an intangible asset and will amortize it on a straight-line basis over the next 20 years. Additionally, Melco disclosed in the financial report that the company's net loss for 2024 was 780 million Hong Kong dollars, significantly narrowing from a loss of 1.74 billion Hong Kong dollars in 2023.
Melco's strategic partner, John Keells Holdings, stated in its financial report meeting in early February that the group would collect fixed and variable rent based on the economic benefits of the casino.
Krishan Balendra, Chairman of John Keells, revealed that Melco is investing 125 million US dollars in casino renovations and equipment purchases, and expects increased guest flow to its Cinnamon Grand and Cinnamon Lakeside hotels once the casino is operational. The group might even initiate renovation plans to align with the casino's development.
Gihan Cooray, Vice Chairman and Group CFO of John Keells, further explained the rent structure, stating: "The group will receive fixed rent and enjoy a share of 50%-55% of the casino's EBITDA (earnings before interest, taxes, depreciation, and amortization). With a gambling revenue of 250 million US dollars and an EBITDA margin of 40%, our rental income is expected to reach 50 million to 55 million US dollars. Additionally, the group can also collect management fees from Melco's hotel brand 'Nuwa', although it is a smaller proportion."
Lawrence Ho, Chairman and CEO of Melco, stated in the annual report that the "City of Dreams Sri Lanka" casino is expected to open as scheduled in the third quarter of 2025, describing the investment as "light-asset model, considerable returns."
It is noteworthy that unlike the operations in Sri Lanka, Melco's casinos in Macau are subject to a special gambling tax, and its Macau casino license is valid from January 2023 to December 2032.
