June 18, 2013 / 9:41 PM / 4 years ago

RPT-INTERVIEW-Australian tycoon Packer's Sri Lanka resort deal at final stage-minister

(Repeats story first published late on Tuesday; no change to text)

* Packer's Crown will not be given casino licence-minister

* Crown can operate casino through local partner, he says

* Sri Lanka to relocate casinos near proposed complex

* Nation's growth fuelled by tourism, infrastructure investment

By Shihar Aneez

COLOMBO, June 18 (Reuters) - Sri Lanka is in the final stage of reaching a $350 million hotel and leisure resort deal with Australian gambling tycoon James Packer's Crown Ltd, the country's investment promotion minister said on Tuesday.

Rapid economic growth in Sri Lanka has been fuelled by Chinese infrastructure investment after the end of the 26-year civil war in 2009. The island nation's proximity to a huge pool of potential gamblers in India and rising tourist numbers are also proving attractive to investors from the gaming industry.

Packer, one of the richest men in Australia, met Sri Lankan ministers in February to discuss hotel and entertainment investment options as he expands his global gambling business, which includes casinos in Australia, Macau, Britain and the United States.

"Now it (the deal) is in the final stage. Now we discuss about the legal matters," Sri Lankan Investment Promotion Minister Lakshman Yapa Abeywardena told Reuters in an interview, without elaborating on the legal matters.

A spokesman for Crown was not immediately available to comment.

Abeywardena said Rank Entertainment Holdings Pvt Ltd, a domestic casino operator, would be Packer's local partner with 45 percent ownership in the resort.

"We are not going to issue any casino licence," he said adding that the local partner could use its licence to run the gaming business of the joint venture with Crown.

Tourist arrivals in the Indian Ocean island nation have risen for 49 months running since the end of the civil war. Sri Lanka expects about 1.25 million foreign visitors in 2013, bringing a revenue of $1.5 billion this year, and forecasts 2.5 million tourists in 2016.

Gambling is regarded as immoral by many in Sri Lanka, a predominantly Buddhist nation. Parliament passed a landmark bill in 2010 to legalise gambling, in an attempt to boost tourism, and there are currently about nine small casinos on the island.

MONKS' CONCERNS

Sri Lanka's influential Buddhist monks and opposition parties have already raised concerns about foreign investors being allowed to open casinos, saying they could destroy the country's culture and religious values.

Abeywardena said Sri Lanka would not issue any more casino licences to foreigners, but that foreign investors could run casinos in partnership with local licence holders.

The minister also said that all casinos would have to be based in D.R. Wijewardena Mawatha, an area in the commercial heart of capital Colombo, where Crown has planned its resort.

This would mean that the nine small casinos on the island would have to relocate.

"The government has decided that all casino owners should come to one place, which is D.R. Wijewardena Mawatha," Abeywardena said. "In future, nobody can run casinos in other places."

Abeywardena said earlier this month that Packer's deal was not a casino business, but a minimum 400-room hotel complex with related services. A Crown source with knowledge of the discussions had told Reuters the company was planning an integrated resort complex, including a casino.

Sri Lanka expects its economy to grow by more than 7 percent this year and is targeting a record $2 billion in foreign direct investment this year.

Packer's Melco Crown Entertainment Ltd plans to build a $1 billion casino in the Philippines in partnership with that country's wealthiest man, Henry Sy. (Editing by Pravin Char)

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