Latin American News Round-Up

President Considering Extension of Municipal Casino Licenses
President Sebastián Piñera has announced he is considering changing Chile’s gaming laws to extend licenses for 15 years. Piñera’s comments come after a number of local governments launched a campaign to ensure that their cities do not lose out on gaming tax revenue and warned of the devastating effects the lack of casino revenue would have within their jurisdictions. Talking to local radio, Piñera explained that the terms of Chile’s Gaming Act of 2005 set out a budgetary adjustment period for municipalities that currently benefit from casino tax revenue.

With the 2005 Casino Act, the eight casinos that were already licensed before the new act then came under the supervision of the local municipalities where they are located and are a vital source of funding. However, they are set to come under the supervision of the Chilean Gaming Control Board at the end of 2015, and the tax will be split equally between the local municipality and the central government. Piñera explained that the government is considering a license extension of 15 years but with a gradual fiscal adjustment. This is so the eight municipal governments that have benefitted from receiving the lion’s share of gaming revenue in the past can make necessary changes to ensure they are less dependent on gaming tax revenue once their licenses end.

The president’s announcement comes at a time when other major changes to Chilean gaming laws are looking increasingly likely due to the rise of illegal gaming. The rise of illegal slot parlors and slot machines in arcades has not only led to a recent crackdown in the capital of Santiago and the cities of Valparaíso, Concepción, Talcahuano, Chiguayante and San Pedro de la Paz, but has also led to Piñera calling for action on the issue. Piñera is also looking to change Chilean gaming laws to mandate that machines in gaming arcades must be approved by the Chilean Gaming Control Board.

Puerto Rico
Operators Call for Changes to Gaming Laws
Members of the Puerto Rican Hotel and Tourism Association (PRHTA) have called for major changes to Puerto Rico’s gaming laws. Dating back to 1948, Puerto Rico’s gaming laws are some of the oldest in the region and, according to President of PRHTA Ismael Vega, need to be changed. Speaking to local news portal, News is Our Business, Vega said that changes need to be made in order to make Puerto Rico’s gambling laws more flexible in order to prevent future closures, specifically when it comes to table gaming. Under present rules, three tables must be manned at all times, and PRHTA is requesting that this be reduced to just one in order to allow operators to use their staff more effectively.

While the Gaming Control Board is also looking at reducing the number of days’ notice that casinos must give before staging special events, the most pressing issue is illegal gaming. Many legal casinos are struggling due to a proliferation of illegal slots throughout the island where illegal gaming operations have spread, especially in shopping malls. According to Vega, the rise in illegal gaming has meant that the industry is going through one of the worst stages in its history, and revenues have dropped from $315 million to $296 million in the last year.

The Gaming Control Board is looking into the issue and considering legalizing these slots as a possible solution to the problem, even though they are banned outside of casinos by law. Despite a crackdown, illegal gaming continues to thrive and, according to customs officers, there could be as many as 60,000 to 70,000 slot machines now operating illegally in Puerto Rico. This in turn has had a negative effect on the budget for the Department of Tourism and the University of Puerto Rico, both of which rely heavily on casino-generated taxable income.

Changes to Gaming Laws in the Cards
Major changes to Mexico’s gaming laws are looking increasingly likely after a long-running investigation into the issue. A committee of 11 deputies was first charged with looking into how licenses have been granted by the Interior Ministry (SEGOB) in April. Chaired by Deputy Ricardo Mejia Berdeja, the cross-party committee was convened after growing reports of corruption and allegations that former members of SEGOB had trafficked licenses. The committee was also given the additional responsibility of suggesting any changes to Mexico’s gaming laws—which date back to 1947—on the back of its findings.

After investigating all of the licenses granted in Mexico and listening to a wide number of experts on the issue, government officials are finding it increasingly apparent that urgent changes are needed. Having met with members of the committee, Head of Mexico’s Interior Ministry Miguel Ángel Osorio Chong has also agreed that Mexico’s gaming laws are out of date and need to be revised. Marcela González Salas, head of the Gaming Control Board within the Interior Ministry, confirmed that there are 49 casinos operating without any kind of license in Mexico. According to local press, Chong has reaffirmed his commitment to tackling illegal gaming and working with the committee to formulate a new gaming law. In addition, it has been agreed that Interior Ministry officials will soon carry out a state-by-state review of illegal gambling in Mexico and analyze each situation on a case-by-case basis.

The announcement was greeted warmly by lawmakers, including the vice president of the committee, Deputy Fernando Zárate, who told local daily El Universal that the rise of illegal gaming was an increasingly urgent matter for the government and that “both the legislative and the executive branch are going to work together to combat illegal gaming.”

Licenses Extended for Seven Casinos as Industry Records Decreasing Revenues
The Attorney General’s Office has requested permission to include new evidence in its trial against two former members of the Colombian Control Board. The charges have been brought against the former director of ETESA (the Territorial Enterprise for Health), which was replaced in 2012 after it was discovered that officials were accepting bribes in return for stays of closure. Charges have been brought against ex-director of ETESA Mery Luz Londoño and her husband, Raúl Quintana. Both were arrested in September 2010 and face charges from the prosecutor’s office for taking money that was destined for the health fund and bribes from slot parlor owners.

Among the evidence that the attorney general’s office now wishes to bring against them are wiretaps and financial documents, and both people now face charges of extortion, conspiracy and illicit enrichment. In Colombia, gaming tax revenue is destined for the Public Health Service and, according to the investigation that was first initiated by an anti-corruption group, both Londoño and Quintana allegedly took billions of pesos in cash that should have gone to Colombia’s beleaguered health sector.

Due to the corruption scandals surrounding the gaming control board, it was replaced in 2012, and the new board, Colijuegos, is made up of members from a number of government ministries. Its director is appointed by the president. Colijuegos has been very active lately in a widespread crackdown on illegal gaming and has launched a public awareness campaign to reverse negative connotations previously associated with the industry. The new campaign is also designed to reverse some of the damage corruption scandals have left in their wake by informing Colombians that the industry is now well-regulated.

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