Neon and Shadows: Sri Lanka’s grey economy, casino for India’s rich
By Asanga Abeygoonasekera
“Sri Lanka can be to India what Macau is to China,” Melco CEO Lawrence Ho said on the night the lights came on. It was August 2 in Colombo. The ballroom glowed like a promise. South Asia’s largest casino was open. I was there at the opening, watching the dream unfold. The air was thick with perfume and optimism. Waiters carried glasses of champagne through corridors lined with the island’s most powerful. Glass, steel, and marble reflected the faces of those who came to see the dream — businessmen, ministers, the city’s elite. Ho spoke of geography: an island close enough to India’s middle class to tempt them with what is tightly limited at home.
I stood in the crowd. Outside, the streets still carried the memory of queues for fuel and food, the silence of a nation declared bankrupt in 2022. The government calls this stability now. The Central Bank governor boasts it — even as 40% remain in poverty. I saw something else — the shape of a grey economy already traced across the island’s broken surface.
India will send its rich here for what it cannot allow within its borders. The pipeline will be discreet. Money will move in shadows, feeding a country desperate for foreign currency. The Hawala networks are already here, silent and trusted. Weak regulation will do the rest. Ho is right: Sri Lanka could be to India what Macau is to China. But Macau is not only glass towers. It is also a conduit. The Congressional-Executive Commission on China says $202 billion in illegal funds pass through it each year. The UN Office on Drugs and Crime has charted the pattern: casinos and junkets feeding regional underground banks, the rise of online platforms, e-junkets, and unregulated cryptocurrency exchanges — all accelerating the anonymous transfer of money. In Southeast Asia, this has built not just an illicit economy, but the networks to sustain it. Chinese authorities caught several junket bosses, including Alvin Chau, in Macau. Who, in Sri Lanka, will ever catch the Indian operators? Even with regulations, the Indian shadow will be too deep, too close, to escape.
Each year at the Cambridge University Economic Crime Symposium, I have heard these warnings. They are not theory. Sri Lanka is exposed. After the economic collapse, Indian capital entered every space: energy, defence, maritime, finance, even the streets, where RSS operations have grown in confidence. A senior security analyst in Colombo spoke of it with quiet resignation. A recent youth protest against the Indian agreements was crushed swiftly by police.
Under the former Wickremesinghe regime, the door was opened wide. Even a land bridge to India was drawn on the table. The current government faces the harder task: to slow the tide while Modi’s foreign policy grows sharper and more assertive. Even the Ministry of Law and Order seemed to carry an Indian key during that period.
In July 2024, I experienced the reach of foreign influence firsthand. My lawyer, Nalinda Indatissa, received a call from the Indian High Commission in Colombo asking for my arrest file. I am a Sri Lankan citizen. No foreign nation should reach into a local custody. Yet the reach was there. A senior Singaporean journalist told me he believed Indian intelligence was behind it, because I had once named the officer who called on the morning of the Easter Sunday terror attack in 2019. “It was dangerous,” he said. “You named a man still in the shadows.”
The operations of Indian intelligence appear deep and extensive. Around that time, a masked man linked to a Buddhist organization in Delhi, reportedly a senior advisor with ties to Indian intelligence, issued a direct threat: “We take down people every day like dogs.”
This newly found aggressiveness of Modi’s shadow men must be confronted.
The casino will not be immune to this climate. It will become another instrument of Indian influence — soft power wrapped in neon, disguised as an economic cure.
In the villages, the news is greeted with hope. People see jobs, tourists, recovery. They do not see the trades that move quietly inside casinos: prostitution, trafficking, drugs, the laundering of violence. Melco’s ‘City of Dreams’ will remain a dream only if its light is kept clean. Signs are already here. Sudden transactions. Forty apartments bought overnight at The Altair by Blackstone. A skyscraper in Colombo changes hands without warning. The state needs investment, but the Financial Intelligence Unit (FIU) must be able to see the true nature of these deals — especially when they involve nations with strategic ambitions.
In Tangalle, I drove to Rekawa beach. A quiet curve of coast. By the sand stood a resort. I asked a villager who owned it. “An Israeli,” he said. “No one here likes his attitude.” The words may be true or not, but suspicion grows easily where rules are weak. Since the Gaza war, Israeli money has moved into beachfront property. Some speak of illegal acquisitions, overstays, IDF stickers. It could be rumour — but rumour is the smoke before the fire in a grey economy. As local journalist Rathindra Kuruwita noted, the government is “squeezed between values — nonalignment, empathy for Palestinians — and vulnerabilities: dollars, debt, jobs.”
The government says it will protect investment. But protecting investment is not protecting sovereignty. A grey economy does more than corrupt — it can unseat governments. History has proved it. It can finance terror. In 2019, the Easter Sunday bombers used Bitcoin. Money moves faster than law and often without a name.
Ethnic fault lines make this more dangerous. Across the Palk Strait lies Tamil Nadu, a diaspora with grievances close enough to touch. A single spark can cross that water. In such a climate, turning Sri Lanka into Macau is not tourism policy — it is a question of control.
Even foreign diplomats have spoken of this risk. The former US Ambassador once warned of money laundering at the Chinese-built port city— “a haven for money launderers and other sorts of nefarious actors.” And here, a final irony. Sri Lanka’s Marxist president, Anura Kumara Dissanayake, stands silent beside the roulette wheel. Here, the revolution has no quarrel with the dice. Ideology bends in the wind of foreign influence. Assertive. A rogue democracy, close to Sri Lanka. India shapes the scene.
The lights in the casino will shine. Guests will come. For a time, the books will look good. But money that arrives without roots leaves without warning. And what it leaves behind is often more costly than what it brought. For the new IGP, the task is clear: see the currents beneath the neon. The FIU should brief the IGP— no exceptions.
I remember the Bollywood star trying to charm the locals again. The applause. The clink of glasses. Then I remember the street outside — the boy selling betel leaves, the wood-planked coffee shop leaning unsteadily at a side entrance to the casino, their faces lit not by neon but by the dull orange of a streetlamp.
In that contrast lies the truth. The city will choose its dream. The grey economy will choose its own. One feeds the other. One will outlast the other.
–Asanga Abeyagoonasekera, a Senior Fellow at the Millennium Project in Washington, DC, is the author of the forthcoming book ‘Winds of Change: Geopolitics at the Crossroads of South and Southeast Asia’ published by World Scientific Singapore
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