Expert flags structural shift in Asia’s gaming sector
Tighter restrictions and changing investment priorities are causing structural changes in the integrated resort industry in South and Southeast Asia. Regional centres like Manila and Phnom Penh have been affected by recent events, such as decreased VIP gambling activity in Macau. Simultaneously, regulators in certain regions, including Singapore and Cambodia, are enforcing more stringent regulations regarding gaming activities.
Jared Valarao, Managing Director of Lakandula Holdings, provides an honest assessment of the junket model that has long characterised Asian gaming finance in an exclusive interview with SiGMA News. He also lays out the macro shifts reshaping capital flows throughout the region and makes a strong case for Sri Lanka’s underappreciated strategic position.
Governance is a new product
When you ask any institutional investor what is preventing them from participating in Asian gaming markets, the response is nearly always the same: complexity. Offshore jurisdictions conceal beneficial ownership structures. Cash flows that are challenging to enclose. Exposure to AML that legal teams find unsettling. These issues have been handled by the gaming industry as compliance overhead for many years. They are, according to Valarao, the key competitive factor of the upcoming ten years.
He said, “The decisive shift will be the convergence of AML-KYC regimes with real beneficial ownership transparency at the capital layer. Jurisdictions that price this in early will attract institutional capital; those that don’t will remain dependent on junket-cycle liquidity that is structurally thinning.”
The message here is straightforward for both developers and regulators: good governance doesn’t get in the way of growth, it’s actually what makes growth possible in the first place.
He further stated, “The next generation of integrated resorts won’t be financed like casinos, they’ll be financed like infrastructure, with sovereign-grade disclosure, ring-fenced cash flows, and measurable community externalities.”
Sri Lanka’s strategic intercept
Valarao cautions against benchmarking Sri Lanka with established markets like Singapore or Manila. The more interesting question is which demand corridors are currently underserved and whether Sri Lanka sits on any of them. His answer is yes, with specificity. “Colombo sits at the intersection of South Asian outbound demand and Middle Eastern wealth corridors that Phnom Penh cannot serve and Singapore prices out.”
Valarao advises against comparing Sri Lanka to well-established markets like Manila or Singapore. Which demand corridors are currently underserved, and if Sri Lanka is located on any of them, are the more intriguing questions. He gives a precise “yes” response.
Rather than competing on headline returns or trying to replicate the VIP volumes of a mature gaming market, Sri Lanka should, in his words, “position itself as a yield jurisdiction for patient capital, lower entry multiples, longer hold horizons, and a tourism base that makes gaming revenue the margin expansion story rather than the thesis.”
Junket model is over
For decades, junket-driven VIP volumes were a major factor in the gaming revenue estimates of the Philippines, Malaysia, and Cambodia. But Valarao does not sugar coat it: the model is in structural decline. “Macau’s compression cascaded through Manila and Phnom Penh, and the institutional memory of that compression is now priced into every serious underwriting.”
The realistic revenue mix for a Sri Lanka-facing integrated resort, he argues, is mass-premium and international-leisure-led, with gaming at perhaps 30-40 per cent of EBITDA rather than 70 per cent.
Designing friction into system
Valarao thinks it’s time to reconsider the design of incentives. He advocates for a more sensible strategy where advantages are earned over time and linked to genuine commitments, such as retaining capital invested for ten years, hiring locally at leadership levels, and meeting quantifiable goals in the areas of community health and education, rather than giving out tax breaks up front.
The goal is to make money fundamentally uncomfortable without waiting for a scandal to trigger a regulatory response, Valarao is pushing for integrating the selection process into the incentive structure itself.
“The jurisdictions winning long-duration FDI aren’t the cheapest, they’re the ones where the rules signal that the regulator is as patient as the investor.”
– Jared Valarao, Managing Director of Lakandula Holdings.
Where money should land
Valarao’s map of Sri Lanka runs on two axes. Colombo Port City, he describes as the obvious anchor purpose-built, connectivity-ready, and structurally designed for mixed-use at scale. The Port City development, a reclaimed land project adjacent to the Colombo CBD, represents probably the most purpose-aligned gaming-tourism site in South Asia outside of Singapore’s Marina Bay district.
Meanwhile, the southern coastal strip between Galle and Hambantota is the more unconventional choice. Chinese-funded infrastructure projects in the area have already resolved the connectivity question but demand has not yet caught up to capacity.
In the case of Sri Lanka in particular, it is neither a cheap version of Manila nor a replica of Singapore. It is a unique value proposition based on yield, locality, and the calculated choice to let gaming be the side effect rather than the main focus. Whether Sri Lanka’s regulators and policymakers move quickly enough to capture that opportunity is, of course, a separate question. Valarao is clear-eyed about the risks of delay. The corridors are not waiting for Sri Lanka to get its regulatory framework right.
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