Latin American News Round-Up

Costa Rica
New Law Aims to Impose 15 Percent Tax
The Costa Rican Committee for Treasury Affairs has approved the text for a new casino law that will be sent up the executive branch for approval. The committee, headed by ex-Treasury Minister Guillermo Zúñiga, has increased the proposed taxation on casinos from a 2 percent on gross income per year to 15 percent and is set to raise U.S. $80 million per year in gaming tax revenue.

The need for revised casino legislation was part of the running platform of recently elected President Laura Chinchilla during her presidential campaign. However, the new law was delayed in committee stage for several weeks while the government tackled other more pressing matters. The new legislation seeks to raise taxation via casinos and gaming in order to combat rising crime and gang violence.

At present, gaming law in Costa Rica restricts casinos to hotels, with the number of tables and slot machines dependent on the number of stars the hotel possesses. Under these rules, there are just over 50 casinos operating in Costa Rica today. However, in a significant change, the new law opens the way for free-standing casinos and slot parlors.

According to the proposed legislation, a new gaming board will also be created in order to monitor gaming and make sure each casino is operating within the terms of its license. As for the 300 or so online sports book and Internet gambling sites operating in Costa Rica, they will each have to pay U.S. $50,000 per year in tax. The new taxation on Internet gambling sites is aimed at raising extra tax revenue in order to help tackle Costa Rica’s U.S. $556 million deficit.

Congress Considering New Gaming Law
The government of Guatemala is considering new gaming legislation that would legalize casino gaming. This reverses gaming law that was passed in 2006, when casinos and slot parlors were banned after the government launched a wide-sweeping investigation into casinos and their links to organized crime.

The damning report, which was published in 2006, revealed that the government had practically no control over gaming and that slot parlors and casinos in Guatemala were routinely defrauding the government out of millions of dollars of tax by avoiding the legally established 13-15 percent tax on payouts. Despite this, many slot machine owners and casino operators applied for and were granted stays of closure by local courts.

The new law seeks to more closely regulate gaming under legislation that would be similar to “El Decreto Ley 2,” the gaming law passed in Panama in 1998. Decreto 2 declared that casinos could be set up provided that they were part of a five-star hotel with a minimum of 300 rooms. The wide-sweeping legislation opened up the way for foreign investment, stated clearly the parameters in which a casino could operate, and changed the casino industry almost overnight in Panama.

Congresswoman Mariano Rayo told the press that it was time to “fine tune” legislation that would legalize gaming in the country. Under the new law, casinos and gaming operations would be closely monitored by government agencies in order to raise tax revenue and to avoid money laundering.

However, the legislation is already generating considerable controversy and dissent in Congress, most notably by Minister of Government Carlos Menoca. Menoca told the press that “This (the new gaming law) can’t be. I know of no such project nor who plans to introduce it. Gambling is both dangerous and violent.”

Given the strength of opposition and the issue of money laundering in Guatemala—which is still a serious issue—the new bill looks like it could face a long and very difficult journey through Congress.

Chavez Likely to Launch New Assault on Gaming
Venezuela’s beleaguered gaming industry faces yet more bad news under the erratic and often bizarre leadership of socialist ex-paratrooper Hugo Chavez. Chavez, who in the same month ordered the exhumation of his 200-year-old Independence hero Simon Bolivar for autopsy, has once again turned his attention to gaming.

Chavez has been a constant critic of the gaming industry in all its forms in Venezuela ever since he first came to power in 1999. Seven weeks after being re-elected in 2007, he announced that he and his cabinet would take “all the measures necessary to eliminate places of prostitution, drug dealing, casinos and bingos—which are often visited by people belonging to the higher classes.” In the same month he banned the importation of all slot machines into the country.

In this, his latest attack on the casino industry, Chavez has announced plans to block the renewal of licenses for slot parlors. He has stated also that he will not grant any more licenses. This move, if it goes into effect, will be carried out by newly appointed members of the National Commission of Casinos, which in turn comes under the control of the Ministry for Tourism.

Puerto Rico
Governor Makes Reversal on Gaming Law
The governor of Puerto Rico, Luis Fortuño, has announced his intention to withdraw a law that would have regulated the thousands of slot machines that are operating illegally on the island. The law, which was part of an emergency tax measure designed to tackle a U.S. $3.2 billion deficit, would have raised an estimated U.S. $220 million per year in extra tax revenue. The project was also designed to reduce the number of slot machines in the county from 120,000 to 40,000 and would have imposed a license fee of U.S. $2,250 per slot machine.

The reversal came after Fortuño met with the president of the Brotherhood of Pentecostal Churches, William Hernández, and other religious leaders. According to local press reports, the turnaround came after Fortuño was persuaded of the moral objection the church had to gaming.

Members of the Hotel and Tourism Association of Puerto Rico have also come out strongly in opposition of the government measure, arguing that the casinos located in hotels on the island would have to make thousands of employees redundant, as 30 percent to 50 percent of all profits made by hotels on the island are generated in casinos attached to the premises.

As a result of Fortuño’s decision Juan Carlos Puig, secretary of the Puerto Rico Treasury Department, has announced new measures along with the Justice Department to confiscate the illegal slot machines now operating in Puerto Rico. With only 8,000 slot machines operating legally, illegal gaming still remains a pressing issue in Puerto Rico, where there are an estimated 120,000 unlicensed slot machines dotted around the island.

Cirsa Expands Operations in Panama
Spanish gaming company Cirsa has announced that it is significantly expanding its operations in Panama after buying a 63.6 percent share in Thunderbird International casinos. Thunderbird International runs six Fiesta brand casinos in Panama and has been present in the region since 1998. Cirsa has invested U.S. $38 million in the new deal, which strengthens its position as leader in the dynamic Panamanian gaming sector, where total bets now stand at $1.2 billion per year for all gaming products.

Cirsa first entered the Panamanian market when it opened the casino attached to the renovated Presidente Remon racetrack in Panama City in 2005. Since then it has opened a further five casinos under brand name Crown, the most recent of which opened in the Hotel Radisson in Colon.

Casinos See Record Returns
Now that all the casinos are up and running again in Chile, the new casinos are showing record returns. In February, Chile was struck by a devastating earthquake measuring 8.8 on the Richter scale, and eight casinos had to temporarily shut down.

One of the casinos affected was the Sun International Monticello casino, the largest casino in Chile. Four thousand customers had to be evacuated from the scene when the earthquake struck in the early hours of the morning. The Monticello opened once again at the end of June after a U.S. $10 million was invested in repairing the damage done. During the opening weekend, 7,000 people returned on its re-opening night—a record.

According to recent figures released by the Chilean Gaming Board, now that all of the casinos are open once again, gross income from the industry stood at U.S. $ 31.75 million in July, compared to U.S. $17.43 million in June, an increase of 82.16 percent. The figures show also that almost half a million people visited the casinos in the same month.

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