Latin American News Round-Up

Calls for the nationalization of gaming are once again rising in Argentina as speculation continues to grow around the future of gaming in Buenos Aires. Rumors that the administration of President Cristina Kirchner was looking into putting casinos under state control first began to surface in August 2012 after the nationalization of Spanish-owned YPF, the country’s biggest oil company—a move that initially proved popular among Argentines. This was followed by a number of moves in the Assembly of Buenos Aires Province to nationalize gaming after Governor Daniel Scioli granted Spanish company Codere extensions on five of its licenses (until 2027).

Gaming unions, along with local politicians from both the western province of Neuquén and the province of Buenos Aires, are now moving to put gaming completely in the hands of the state. Under current proposals put forward by local lawmaker Raúl Godoy, all gaming establishments in the province of Neuquén would be run by the Provincial State Lottery, while revenue generated by gaming would be divided among the local municipalities.

Meanwhile in Buenos Aires, the move to put 12 casinos under state control now has the backing of two state senators who have put the proposal before the House Assembly of Buenos Aires Province. The initiative is gaining momentum and would put all these licences that finish at the end of this year under state control, meaning that the state would gain control of almost 4,000 slot machines located in 12 casinos at the beginning of 2014.

The uncertainty over the future of gaming in the province continues to grow, especially as local press articles have reported that leading operator Codere was planning on leaving the market. Codere has been present in Argentina since 1990. However, these reports have been strongly denied by Codere, which has reiterated its plans to remain a key player in the local market.

A Special Investigative Commission in Mexico, which has been charged with looking at the growth of the casino sector and the issuing of licenses by the regulatory body (SEGOB), has called for change to Mexico’s gaming laws. Chaired by Deputy Ricardo Mejia Berdeja, the cross-party committee began its investigation in April and has been charged with the investigation of the federal government’s past involvement in the issuing of licenses. The committee was convened after growing reports of corruption and allegations that former members of SEGOB had trafficked licenses.

The committee has so far discovered that there could also be as many as 300 casinos that remain open due to judicial stays of closures, which point to possible collusion between local courts and casino operators. The committee is currently investigating each license granted throughout Mexico and has asked the federal courts for information regarding the casinos that have applied for and been granted stays of closure in the past. SEGOB has also agreed to release documents to the investigative committee regarding the granting of licenses to 28 casinos currently being investigated by the Attorney General’s office.

Mexico’s gaming landscape has emerged as increasingly chaotic of late, with a number of local governments enacting their own urban zoning laws designed to prevent the expansion of gaming. In addition, gaming has been earmarked as an urgent issue by the present administration, while the committee has emphasised that new laws are needed to ensure that gaming in Mexico does not come under the control of organized crime. According to the figures released by the committee, there are 32 license holders that run 400 gaming establishments. Almost half of these are granted under judicial stays of closure, while licenses have so far been granted to a total of 700 gaming establishments.

Puerto Rico
As previously reported (on Nov. 1, 2012), the government in Puerto Rico is considering closing all slot parlors on the island due to the proliferation of illegal gaming. Gaming law in Puerto Rico currently states that slot machines may only be present in casinos attached to hotels, and tax revenue generated by casinos accounts for 50 percent of the budget of the Ministry of Tourism. The industry is also a major contributor to the only state-run university on the island. However, an estimated 45,000 illegal slot parlors in Puerto Rico have contributed to the closure of four casinos in the last year alone.

Following a congressional committee study that published its findings in May, the government could soon adopt more sweeping powers when it comes to the inspection and closure of slot parlors. The committee estimated that between March and December 2012, the government lost out on $1.9 million in gaming tax revenue. Despite this, the issue still remains divisive and two very different approaches are now afoot in both houses. A new proposal being considered by the Senate would permit a total of 20,000 slot machines to be present in small businesses, which would be regulated in order to meet shortfalls in state pensions, while another law under consideration in the House of Representatives would ban them altogether.

According to a study commissioned by the Ministry of Tourism, the closure of slot parlors on the island would increase casino revenue by $180 million a year, or by 58 percent. However, the director of legal affairs for the Ministry has warned that the banning of slot machines outside casinos will soon mean that the number of slot machines on the island will go beyond 3,119. Referring to a study undertaken on behalf of the ministry in 2009, Maritere Colón told local press this is the number of slot machines that would be economically viable on the island.

The Chilean Senate has granted the municipal casinos a 15-year extension on their licenses. The extension is designed to give the seven cities in which they are located sufficient time to search for new ways to gain additional tax revenue to meet the shortfall once the state-run casinos are handed over to the Gaming Control Board. Under previous legislation, the municipal casinos were set to lose control over their casinos at the end of this year. However, city mayors have reacted strongly to the move as casinos located in their jurisdictions are a major source of local funding.

The news comes at a time when the privately run casinos in Chile are reporting a fall in visitor numbers. In 2005, Chile passed gaming legislation that allowed for the building of 18 privately owned and operated casinos, in addition to the seven municipal casinos already in operation. Gross gaming revenue fell by 11.4 percent for the privately run casinos in April compared with the previous month and, according to the Chilean Gaming Control Board, between January and April 2013 the casinos received 2.1 million visitors—4.6 percent less when compared with the same period in 2012.

The fall in revenues has been blamed on the smoking ban that went into effect March 1, and there has also been a significant increase in illegal gaming in Chile with the growth of illegal slot machines located in arcades. The Ministry of Finance is currently looking at ways to regulate the growing slot parlor industry in Chile, and the move has the backing of President Sebastián Piñera.

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