Sri Lanka's parliament approved a US$400 million development by Australian casino operator Crown Resorts - but said it would not be allowed to open a casino.
The hotel and shopping complex proposed by Australian gambling tycoon James Packer's company is opposed by religious leaders and opposition parties.
They fear it will eventually be allowed to operate a casino, something they see as a threat to traditional Buddhist morality.
Economic Development Minister Basil Rajapaksa said that would not happen.
"We will not allow casinos. I emphasise that. They [investors] asked [for permission for casinos], but we did not grant permission and we will not allow it in future either," he said at a heated debate in parliament. Opponents were sceptical, noting that excluding a casino at the resort had not been written into law.
"Why is the honourable minister misleading this house, the entire country, and the Buddhist clergy? I have the gazette with me," opposition lawmaker Joseph Michael Perera told parliament, referring to the official journal that publishes legislation.
The gazette states that the Crown project will be a 400-room tourist resort with shopping malls, offices and "associated facilities". Opponents say thevague phrase might give the company room to open a casino in the future. Packer, one of Australia's richest men, first obtained cabinet approval for Crown's projects in September, but the terms were altered and the process has been delayed.
There are only a few, mostly small-scale, casinos in Sri Lanka and opponents of bigger operations fear they would lead to a boom in prostitution and damage religious values and culture in the mainly Buddhist nation.
Parliament approved two other projects - a US$300 million resort near Packer's planned complex, and a development called Water Front by Sri Lankan group John Keells Holdings, which also plans to include a casino, worth US$850 million.