Melco Resorts & Entertainment’s casino project in Sri Lanka will predominantly target the Indian market, with estimated annual gaming revenues of up to US$250 million per year, the company stated on Tuesday.
As reported by IAG, Melco will fit-out and operate the casino and some hotel rooms at Sri Lanka’s US$1 billion Cinnamon Life Integrated Resort after being awarded a 20-year casino license by the Government of Sri Lanka. The casino is expected to open in mid-2025.
Providing some further insight into the deal during the company’s 1Q24 earnings call, Melco Chairman and CEO Lawrence Ho said he saw Sri Lanka becoming to India what Macau is to China by tapping into its enormous population base and growing economy.
“Having looked at the Indian gaming market, I don’t think anything is really going to come of it for the next decade or so, and with the rising Indian economy and the wealth creation, Sri Lanka is the closest gaming jurisdiction to India,” Ho explained.
Melco Executive Vice President and CFO Geoff Davis added, “India is definitely the most interesting feeder market and I think there’s very significant potential there. There is some level of domestic spending as well but our goal will be to address those feeder markets in India and more broadly in the region.
“We think the market potential there significantly exceeds where we are today with the existing operators in the market, so [we’re targeting] a combination of local and domestic but very heavily skewed towards international when we think about where the growth can come from going forward.”
Davis said he expects international play to ultimately comprise two-thirds of the company’s Sri Lankan revenues, with GGR “comfortably in the US$200 million to $250 million” range annually.
Melco plans to spend US$125 million to fit out the casino, which Ho described as a “small bet for a potentially huge opportunity.”
“I don’t think there is any published data on the size of the gaming market but we’ve done a lot of bottom up work,” he explained.
“I think there are two operators in the [Sri Lanka] market with four casinos (combined), but those are all very local, very local, and the casinos are not in an integrated resort or even attached to hotels.
“We are, along with [local partner] John Keells, raising the bar significantly to a world class standard with this integrated resort and the casino that we’re fitting out. And while I think it’s a little too early to provide specific returns, we’re anticipating returns that are very attractive, very shareholder friendly, that will drive shareholder value and probably returns that would be difficult to attain in most mature markets.
“So, we’re very pleased with the opportunity there. I think it’s a great way to tap into a market with tremendous potential in a capital light way.”
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