At least seven people were killed and another 21 wounded when a race car ploughed into spectators at a packed motorsport event hosted by Sri Lanka's army Sunday, police said.

A driver crashed into the crowd on an unprotected stretch of the track at the Fox Hill circuit, which is maintained by the Sri Lankan army.

A video shared widely on social media showed track marshals waving yellow flags to warn other drivers to slow down after a car overturned on the track.

The drivers are seen speeding past in clouds of orange dust until a red car slams into the crowd, and people are heard screaming.

"A total of 27 people were taken to hospital and seven of them succumbed to their injuries," spokesman Nihal Thalduwa said, adding that an eight-year-old girl was among the dead.

Shortly before the crash, army chief Vikum Liyanage announced that the gates had been opened to spectators free of charge to promote motorsports, with the event being held for the first time in five years due to the Covid pandemic and the island's economic crisis.

"Today is a very special day... we decided to allow anyone to come in free," Liyanage said, claiming that about 100,000 spectators were at the Fox Hill circuit, around 180 kilometres (112 miles) east of Colombo.

Sri Lanka's roads are among the most dangerous in the world. On average, eight fatalities are reported daily along the 12,500 kilometers (7,812 miles) of roads.