John Keells Holdings is to build a 650 million US dollar resort with a "luxury hotel, convention centre, entertainment and gaming facilities, international standards shopping mall, luxury condominiums, serviced apartments and office space."
Under a second phase, another 100 million dollars may be invested.
The notice issued under Sri Lanka's strategic investment law by the investments promotions minister gives the project a full income tax holiday for 10 years and another 15 years at 6.0 percent of profits from non-gaming revenues.
If the project has gaming activities "the profits from this activity shall be liable for corporate tax at the applicable rate," but rents collected as landlord from "operators of the gaming activities shall be considered as nongaming" the notice said.
John Keells Holdings had made no official mention of gaming at the proposed resort or a foreign or local gaming partner, but there had been market expectations of gaming facilities in the project.
Sri Lanka's investment promotions minister Lakshman Abeywardene had said no new casino licenses would be issued, but a formal regulatory and licensing regime for gaming is still pending.
A similar resort in Colombo, Lake Leisure Holdings, in a joint venture between Australia's Crown and Sri Lanka's Rank Holdings, both with ongoing gaming operations.
Analysts expect the two resorts to draw high spending tourists from India, the Middle East and also China.