At least seven people including one police officer were shot dead in gun battles in the early hours of Thursday after a gang attacked a Kenyan coastal casino, police said.
"Six of the attackers were shot dead but they also killed one of our police officers," regional police chief Aggrey Adoli told AFP.
Adoli said that a large gang -- who he said were members of coastal separatist group the Mombasa Republic Council (MRC) -- had attacked a casino in Malindi, a popular Indian Ocean tourist resort.
There were no reports so far that any tourists had been harmed in the attack.
"There was a raid by MRC attackers at Malindi casino earlier this morning at 2.00 am by a gang of about 100," Adoli said.
Four police officers were at the casino when the raid took place, he added.
"There was a fierce shoot-out outside the casino, because they wanted to try to get in but they were repulsed," Adoli said. The officers had arrested four people, he added.
"We have a contingent of police officers looking for the attackers, we suspect they are hiding in forests around Malindi."
Malindi, some 95 kilometres (60 miles) north of Kenya's main port city of Mombasa, is home is several top-end international tourist resorts. Italy's billionaire former prime minister Silvio Berlusconi has visited the palm-fringed resort several times.
Kenya's billion-dollar tourism industry is the East African nation's second biggest cash earner after horticulture.
The MRC, a group seeking the secession of the coastal region, were blamed for a series of attacks just hours before Kenya's March 4 general elections in which at least 12 people were killed.
The MRC claims that the predominantly Muslim coastal region is not part of Kenya and argues that it has been neglected by the central government.
The coastal region is expected to be especially busy over the upcoming Easter weekend.
Several Western embassies have issued warnings to their citizens to take care over the weekend, as the country waits for a ruling by the Supreme Court on a legal challenge to the validity of the March 4 polls.
The court has until Saturday to decide whether Uhuru Kenyatta -- who was declared the winner of the polls -- should be confirmed as Kenya's new president or whether new elections should take place.
How the country deals with the ruling on the vote is a high-stakes test for a country still traumatised by the violence of 2007 elections.
Defeated presidential hopeful and outgoing Prime Minister Raila Odinga has alleged widespread irregularities in the polls.
The elections in 2007 were marred by similar complaints of fraud and descended into tribal bloodshed that killed more than 1,100 people and caused hundreds of thousands to flee their homes.
However, despite fears in the run-up to the elections of a possible repeat of that violence, Kenya has been calm in recent weeks, apart from isolated incidents.