South American Industry Report

south america
market update
2016
1
SOUTH AMERICA
Regulatory Overview
Clarion Gaming in Association with
Gaming Publishing (G3 magazine)
have created an exclusive report
for Juegos Miami detailing the
gaming markets of South America
Today the South American market is poised on the
edge of major changes many of which will have a
profound impact on the gaming landscape in the
future. Governments in almost every country have
sought to more fully regulate gambling and have
passed significant laws which provide clear guidelines and a framework in which the industry may
operate. As a result gaming has grown substantially in the region and has increasingly won recognition as a legitimate business which can generate
substantial tax revenues.
2
While the gaming industry continues to gain
ground, gambling as a pastime has become more
popular, widespread and acceptable. Although
small compared to other regional markets the
gambling industry in Latin America has consistently recorded fast growth.
With new gaming laws now being debated as a
matter of increasing urgency in a number of jurisdictions the G3 Latin America Regulatory Report
2016 covers how gaming legislation has evolved
over the last ten years and focuses on how gaming
policy is shaping up today in every jurisdiction
in South America. With gaming legislation often
going through a long and complex process, the
report covers gaming legislation as it has faced
every hurdle and all aspects of the market including casinos, slot parlours, on and off track horse
race betting, bricks and mortar sports betting,
online gaming, bingo and lotteries.
Covering the size and scope of the market, the report pays particular emphasis and offers in depth
analysis of the gaming markets in Argentina,
Mexico, Brazil, Colombia and Chile. But smaller
markets are also covered in detail which we see as
having the potential for major growth in the future
such as Paraguay, Peru and Nicaragua.
However a number of major developments are
on the way in two of the region’s largest markets:
Mexico and Brazil and these are both covered
in particular depth in this report. In Mexico the
House of Representatives approved the new Federal Betting and Raffles Law in December 2014
which aims to regulate the gaming industry more
efficiently, and this is now awaiting approval in
the Senate. In Brazil the text of a new gaming bill
which would allow for 35 casinos could be passed
before the end of this year.
SOUTH AMERICA
Key Developments and Trends
Opportunities and major changes
in the land-based sector have
concentrated the focus of the
international community, while
online gaming still remains
unchartered territory
The gaming landscape in Latin America has seen a
remarkable transformation over the last ten years.
While a number of governments have passed wide
sweeping gaming laws which have further opened
up the market for foreign investment, elsewhere
developments have been far less positive with a
number of governments moving to ban casinos
and other forms of gaming completely.
At the same time a number of gaming markets are
underdeveloped and this is especially true of the
sports betting industry. While the casino and slot
parlour industry continues to grow land based
sports betting remains in many jurisdictions small
scale. Indeed in almost all markets sports betting
is limited to a small number of government lottery
type sports betting products with little or no
brick and mortar option available. This is perhaps
particularly surprising given the Latin American
passion for sports and the fact that horse race
betting is in almost all jurisdictions is well
established with a long and distinguished history.
Although the horse racing industry is in decline
a number of tracks have been able to remain
open due to the racino model which has proven
extremely popular in Uruguay, Panama, and
Argentina. There has also been more good news of
A major issue that remains is illegal gaming.
late as a number of agreements have been made
Over the last ten years regulatory bodies in Latin
to simulcast races abroad from some of the largest
America have met with varying levels of success in tracks in Latin America which has provided a
eliminating illegal gambling and creating a clearer welcome and well needed boost for the industry.
legislative framework in which the land based
sector can operate. But illegal gaming remains
Meanwhile, online gambling still remains
as issue in every jurisdiction especially Brazil
unchartered territory when it comes to a good
where numbers runners and the mafia control an
number of jurisdictions and even when online
infamous street lottery called the “Animal Game,” gambling is banned little is done to block locals
as well as in Colombia where illegal gaming still
from accessing offshore betting sites. However, a
accounts for at least 20 per cent of the market,
number of governments, albeit slowly, are finally
and Bolivia and Paraguay where illegal gaming
addressing the issue and could open up the market
remains rampant. In addition slot machines
to offshore operators while other markets such
located outside of casinos are an increasingly point as Uruguay and Colombia look set to allow online
of contention in Chile, Uruguay and Mexico.
gaming long term.
When it comes to bingo the industry has been
impacted negatively by political developments
and a lack of interest locally and bingo halls are
now banned in Ecuador along with most other
types of gaming, while in Venezuela only a small
and beleaguered handful remain in the wake of
the government’s continued crackdown on the
gaming industry. Meanwhile, in other countries
such as Paraguay, where bingo has been permitted
for over twenty years, the game has simply failed
to take off and only bingo on television is popular.
Latin America therefore offers an extremely
diverse picture when it comes to gaming. Overall
there is still much work to be done to combat
illegal gaming and open up the market and there
is also still huge room for growth especially when
it comes to sports betting and online gaming.
However the market has improved immeasurably
as lawmakers seek to capitalise on the benefits of
a well regulated industry and many markets are
likely to see a number of major developments in
the near future.
3
COUNTRY-BY-COUNTRY
gaming sector analysis
Country-by-country analysis
of gaming sectors, providing
regulatory updates and legislative
changes affecting all aspects of
the gaming industry in the South
American market. Sectors include:
Casinos and slots, sports-betting,
horse racing and off track betting,
bingo, online and lotteries
ARGENTINA
CASINOS AND SLOT MACHINES
Gaming has proliferated rapidly over the last ten
years in Argentina especially in capital Buenos
Aires, where according to a recent study gaming
has increased 70 per cent since 2007. Nationwide
in 2007 there were a total of 80 slot parlours,
racetracks and casinos in Argentina. This has since
almost doubled to 157. On a national level casinos
are less controversial then they are in the capital
and they have been increasing steadily especially
in the provinces of Rosario and Mendoza. Rosario
is now home to the largest casino in Latin America
while casinos in tourist hotspots such as Mendoza
are adding to the number of tourist attractions on
offer.
Indeed casinos look likely to expand in the coming
years in other provinces such as Missiones in the
north east where they will be instrumental in
improving tourist infrastructure. Bingo halls in
Buenos Aires, meanwhile, are often large scale
housing in some cases hundreds of Class III slot
machines on the premises and there are there are
a total of 15,000 slot machines in the province of
Buenos Aires alone.
While casinos continue to proliferate nationwide
and at a fast pace, especially in tourist hot spots,
gaming in the capital is still a deeply divisive and
complex issue. Although casinos are banned by
law there are still three large scale casinos in
the capital. These are the two “floating casinos”
4
docked permanently to the harbour while the
third is under the racetrack in the neighbourhood
of Palermo downtown. All three have been
the focus of a bitter dispute between the city
government and the federal government as to
who should reap the tax benefits of gaming.
share, the concession to run the first three casinos
in the province. Then, in 2003, while Kirchner
was president, the National Lottery Commission
granted the Palermo racetrack the right to house
150 slot machines. The slot machines were to be
run and operated by Casino Club.
This is because while the city of Buenos Aires has
been autonomous since 1994 it is the National
Lottery Commission which has control over
gaming. While a 2007 Supreme Court decision
finally passed judgement that the casinos came
under federal, not city jurisdiction both parties
continue to battle it out over who should reap the
tax benefits. All three casinos continue to be the
focus of considerable controversy.
Since 2003, the number of slot machines at the
Palermo racetrack has expanded greatly, and
today the casino now houses approximately
4,000 slot machines and nine electronic roulette
tables. According to estimates, these slot
machines each generate US$300 per day, which
combined totals to more than US$1m dollars per
day net win.
The largest casino in Buenos Aires is located
beneath one of the most famous landmarks in
the city, the Palermo racetrack. Surrounded by
the largest park in the city, the racetrack opened
on May 7, 1876, as the first racecourse in Buenos
Aires.
Unfortunately, with the horse racing industry
in decline, the track saw falling profits for many
years. The track was purchased by Hipódromo
Argentino de Palermo SA (HAPSA) in 1992, but
for the next 10 years profits continued to decline.
Then, in 2002, HAPSA won the right to install slot
machines on the premises.
The track now follows the racino model (casinos
attached to racetracks), which has proven highly
successful in the region. The casino is very
popular and has brought new life to the track and
to the surrounding area. However, there were
cries of foul play surrounding the relationship
between the now deceased Argentinean
President Nestor Kirchner and his friend, the selfmade businessman Cristóbal López.
In 2001, while he was governor of the province
Santa Cruz, Kirchner granted Casino Club SA, in
which López now has an estimated 30 percent
In 2007, HAPSA’s right to run the casino and
racetrack was extended from 2017 until 2032.
Kirchner, in one his last acts as president (the
decree was made five days before he relinquished
his post), also ordered an additional 1,500 slot
machines to be installed on top of the 3,000 then
in operation, in effect ordering the racetrack
to increase the number slot machines so that it
could meet growing demand.
Since then, controversy over gaming in the city
has continued, but over another issue: taxes.
Casinos in the capital currently pay only half the
amount of taxes that casinos located in the wider
province of Buenos Aires pay. This is because,
in some ways, they are still operating in a legal
vacuum, as the city administration and the
federal government battle it out over who has
control over gaming in the city.
The background to this quarrel is that, in 1994,
a constitutional amendment granted the city
autonomy, and since then the city of Buenos
Aires has been governed by an elected major’s
office and a 60-member elected assembly. Ever
since 1994, the city has tried to collect the tax
revenue generated from gaming.
However, judicial rulings have opposed these
attempts, ruling that since gaming comes under
the control of the National Lottery Commission, it
is the federal government, not the city that retains
control and that, therefore, it is the state that
should reap the tax benefits of gaming.
In the meantime, the city’s attempts to collect
additional tax revenue from gaming has been
thwarted at almost every turn. In 2008, local
politicians ruled that the casinos operating in the
city’s jurisdiction should pay an 8 percent tax on
yearly gross income. But as court rulings are still
in place that state that casinos come under federal
jurisdiction, the city has not been able to collect
this additional tax—meaning that it is losing
several millions of dollars in gaming revenue per
year.
Controversy also extends to the other two
casino located in the city—the so-called “floating
casinos” that are moored permanently to the city
harbour. The first floating casino was granted a
licence under then-President Menem in 1999.
Via presidential decree, Menem, the conservative
Peronist who ruled Argentina in the 1990’s,
permitted the floating casino on the grounds that
it was on the River Plate. In July 2004, then-head
of the Lottery Commission Waldo Farías granted
Spanish gaming company CIRSA the right to
operate a second boat alongside the first. In 2007
López bought a significant share of the floating
casinos.
As is the case for the racino in Palermo,
the floating casinos are also the focus of a
power struggle between the local and federal
government as to who should control gaming in
the city. Because the boats, which are Mississippistyle riverboats converted into casinos, are
officially in national waters and not in the
territory encompassed by the Buenos Aires city
limits, they both fall under the jurisdiction of the
federal government, where casinos are legal.
To begin with, the city government rejected
this on principle, arguing that as the boats
were physically moored to the harbour, they
were operating illegally. However, as the city
government has reluctantly begun to accept their
existence (after several unsuccessful attempts
to shut them down), the focus has changed away
from whether they should be allowed to who
should control them. This debate continues even
after the 2007 Supreme Court decision which
ruled that the casinos came under federal, not city,
jurisdiction.
The issue does, however, seem to finally coming
to a head under the new administration. Mauricio
Macri won the presidential election beating rival
Daniel Scioli in a closely contested Presidential
race in December last year and his Cambiemos
(Let’s Change) party now holds power over the
province of Buenos Aires, the City of Buenos
Aires and the executive branch which could
mean a more cohesive approach when it comes to
gaming. In 2011 while serving as major of the city
of Buenos Aires and before becoming President,
Macri vowed to continue to strive to put gaming
once again under the control of the city.
also launched Pingazo which allows customers
to bet on the outcome of the races run in The San
Isidro and La Plata racetracks. There are around
400 Turfito outlets in the capital and around 300
Pingazo electronic sales points based in lottery
outlets in the province of Buenos Aires.
The recently elected Mayor of Buenos Aires,
Horacio Rodriguez Larreta will attempt to place
all gaming operations which are located in the
city under the city’s jurisdiction for the first time.
The move is part of a number of measures which
are aimed at the transference of powers from
the national government to the city government.
Larreta is also looking at ways to transfer
jurisdiction over the city port to the city which
would put the floating casinos under the city’s
jurisdiction for the first time as well.
SPORTS BETTING
Bricks and mortar sports betting in Argentina is
extremely limited and there are no bricks and
mortar sports betting shops. There is only one
football betting product available - a pools betting
game called Pronósticos Deportivos (Prode)
tickets for which can be bought online or at
lottery retail outlets. The game records revenues
of less than US$100 thousand a year. According to
Argentine law Prode is the only company allowed
to offer sports betting apart from a small number
of online companies and these may only offer
their services to those living within the province
where they have a licence.
While serving as mayor Mauricio Macri also tried
to reach an agreement whereby casinos located
in the city would pay back a long standing a
debt of between $1.5bn pesos and $2bn pesos
in gross gaming back taxes to the city but no
agreement was reached during his term in office.
Crucially, now that Cristina Kirchner is no longer
in power, Lopez who has long been her ally after
her husband passed away, has now lost the
political protection he had enjoyed while she
was president. As a result he is is currently being
investigated for money laundering. In addition
an envoy of President Mauricio Macri has been
sent to inform him that he has one month to repay
the tax debt to the City of Buenos Aires of an
estimated $4bn pesos for once and for all.
HORSE RACING AND OFF TRACK BETTING
In Argentina there is one racetrack in the city
of Buenos Aires and four tracks in the province
- the San Isidro racetrack and the La Plata
racetracks are the largest. The others are located
in the towns of Tandil, Azul and Dolores. There
are also a number of smaller racetracks dotted
around the country. The racetrack in Palermo is
located near the city centre and boasts one of the
best racing tracks in Latin America. It stages 1,700
races a year, including one of the most important
events in the racing calendar, the Gran Premio
Nacional. The slot machines in the racino have
brought customers back to the racetrack, provided
vital funding to those involved in the beleaguered
horse racing industry and increased the cash
prizes for winners.
Off track betting for the races carried out in the
racetracks in the province are is available at 55
points of sale in the province while there are
8 points of sale in the capital and and 58 other
agencies distributed nationwide. Argentines
can also take part in a pools horse race betting
game called Turfito. Turfito was first given the go
ahead by the Buenos Aires Lottery in 2002, and
allows customers to make a bet on horse racing
in lottery outlets in the capital. In 2004 the lottery
BINGO
Bingo halls are controlled and regulated by each
state. In Argentina bingo halls are often large
scale and in most instances house a large number
of slot machines. They are most prominent in the
province of Buenos Aires where Spanish company
Codere is now the market leader in the sector. In
1991 the company was first granted permission
to offer bingo in Argentina and combined Codere
now runs just under 5,300 slot machines in its
bingo outlets.
In 2012 then governor of the province of Buenos
Aires Daniel Scioli extended the licences of 14 of
the 46 bingo halls in his province in order to meet
the shortfall in cash bonuses for state workers.
Set to expire in 2013 and 2014 the licences were
renewed until 2027 in a deal which saw bingo
operators pay a special licence fee. The decision
was made through a decree and a resolution. The
licence renewal was justified as the funds that
it would produce would “ensure the province’s
financial sustainability” and “would contribute to
supporting the provincial economy as it faces the
implications...of the current international financial
crisis” according to the decree, signed by Governor
Scioli. Under the agreement 5 percent of the
resources obtained by the government through
this licence renewal was be distributed among the
135 municipal districts in the province.
ONLINE
Online gaming in Argentina is limited under
current rules, and only a very small number of
local interactive betting sites are permitted to
offer their services and then only in the province
where they operate. Generally speaking these
sites have faced a number of legal problems and in
most cases were closed soon afterwards. The first
legally established online sports book went online
in Argentina in March 2006.
5
Formoapuesta was granted a licence to operate in
the state of Formosa and generated an estimated
US$100 thousand in bets per month after going
online in March 2006. Initially a joint venture
between Argentine investors and UK-listed
Company BetonSports, Formoapuestas obtained
the licence in the province of Formosa through a
government agency called the Institute for Social
Assistance in Formosa (IAS). However the IAS
revoked its licence shortly afterwards.
Similarly vcapuestas.com.ar, which was licensed
to operate in the province of Misiones, was
also revoked in this case by the State Justice
Department. The site was run and owned by
Gibraltar-based online gaming company Victor
Chandler which announced in 2006 that it had
been awarded a licence to operate betting and
gaming websites in the province of Misiones. Its
licence in Argentina was its first in South America
Online gaming is not permitted in the capital of
Argentina nor in the province of Buenos Aires.
When operators have been found to offer their
services outside of the province and capital the
government has moved to block them from doing
so in the courts.
In May 2012, the Buenos Aires Lottery took Bwin
to court as players from Buenos Aires province
were found to be being using the site while it
only had a licence to operate in the province
of Misiones. In August 2012, a federal court
supported the claims put forward by the Buenos
Aires Lottery, arguing that the lottery was the
only body permitted to offer sports betting in the
province.
The autonomous city of Buenos Aires has also
been strict when it comes to offshore operators
found to be operating locally. In March 2009 a
city judge ordered that access to the 888.com.ar
website based in Gibraltar be blocked for those
living in the city. This was because the company
was allowing bets to be made in the city of
Buenos Aires in contravention to local law which
authorises only those companies with a licence to
operate gaming operations within the city limits.
As a result 888.com asked for and was granted
48 hours to ensure that its server would no longer
allow any bets to be processed in Buenos Aires.
The Argentine facing site is now no longer in
operation.
LOTTERIES
Nationwide lotteries in Argentina are run by the
government under the Lotería Nacional Sociedad
del Estado and money generated from lotteries
goes to social welfare programmes. Lotteries in
Buenos Aires province are run and overseen by
Lotería de la Provincia de Buenos Aires. There are
around 3,700 lottery outlets in the province of
Buenos Aires. The lottery of Buenos Aires Province
now runs a total of twenty different lotteries.
6
BOLIVIA
CASINOS AND SLOT MACHINES
Traditionally the gaming industry has suffered due
to the lack of a clear legal framework in Bolivia
where gaming law dates back as far as 1938 and
where casino type gaming has until very recently
been banned. The 1938 law banned all types of
gaming in Bolivia but due to the rise of gaming
the government was forced to grant around two
hundred slot parlours a licence to operate in 1997
via a temporary licence.
Since then there have been a number of moves
to more closely regulate the industry including a
number of government led proposals to replace
the 1938 gaming act. However, any moves to
repeal the gaming act have consistently met
with fierce resistance from local municipal
governments who under previous rules reaped 85
per cent of the tax benefit of gaming operations
located within their jurisdictions.
Set up in 2007 the new gaming board The
Authority of Taxation and Social Control over
Gaming (AJ) has far wider powers when it comes
to inspecting slot parlours and casinos and
has initiated a number of high profile raids on
illegal gaming facilities. The board issued its first
casino licence in 2014 but there are still only two
companies licensed to offer gaming in Bolivia:
Curucusí Games S.R.L and Max Entertainment
S.R.L which have complied with the regulations
set down by the gaming board. The other gaming
establishments currently operating in Bolivia are
all illegal.
However while significant progress has been
made in Latin America when it comes to
regulating gaming, Bolivia still lags significantly
behind and the market remains largely
unregulated with illegal gaming widespread
despite a huge number of raids on illegal
establishments.
In 2007 a new gaming act proposed by the
administration of President Evo Morales, which
would have given the central government
full control over gaming, was stalled and then
abandoned in the Bolivian Congress. Undeterred
the government brought the issue up once again
in 2010 before the Congress. The Congress finally
managed to pass a new gaming act which allows
the central government to reap 70 per cent of the
tax income generated by gaming and gives the
government total control over the industry via a
newly established gaming board.
HORSE RACING
The horse racing industry in Bolivia is still limited
to local small events and only occurs only at local
festivals and national holidays. Horse racing
is extremely small scale and there is still no
formalised race betting industry in Bolivia.
Although the law does allow for fully fledged
large scale casinos it has proven extremely
controversial amongst operators as it puts in place
an extra tax burden on the both the operators
and the players. For the player this amounts to
a 15 per cent tax the moment the player buys
chips or tokens at a slot parlour or casino and for
the operator a 30 per cent tax on gross income is
applicable. 30 percent of gaming income goes to
the General Treasury of the Nation, 15 per cent
goes to the provincial government and 15 per cent
goes the municipal government.
BINGO
Bingo is popular in Bolivia and many bingo halls
are equipped with slot machines. Lotex S.A. won
the concession to run bingos in Bolivia and began
operating bingo in 2002 in its gaming parlours
nationwide under its Bingo Bahiti brand and
eventually opened fifteen bingo halls nationwide.
Lotex invested over US$12m in Bolivia and
announced plans in 2006 to double its investment
in the area.
The new gaming act also replaces the previous gaming
board within the National Lottery Commission of
Charity and Health (LONABOL) which had been
hampered by high profile scandals revolving around
the illegal extensions of licences. Ex head of the
organisation Juan Canelas Morató was found guilty
of extortion in 2004 and was handed down a two
and a half year prison sentence. In a wide sweeping
investigation into the organisation a further handful
of high ranking members of LONABAL faced similar
charges for offences carried out between 2003 and
2007. This culminated when the Minister of Health
was forced to resign from the cabinet, after corruption
charges were filed against him for allegedly accepting
multi-million dollar bribes in exchange for renewing
the license of a casino.
SPORTS BETTING
While sports betting is permitted under Bolivian
gaming law the sports betting industry in Bolivia
is extremely under developed with only a small
handful of sports betting shops nationwide.
The largest bingo hall in Bolivia was until 2011
the Bingo Bahiti in Santa Cruz. The opening of the
Bingo Bahiti in Santa Cruz was followed by the
opening of a US$1m Bingo Bahiti bingo hall in La
Paz which opened in 2006. Bingo halls under the
Bingo Bahiti brand opened up shortly afterwards
in the cities of Cochabamba, Sucre and Tarija. All
of the Bingo Bahiti bingo halls offered slot gaming
as well as bingo.
However in 2011 the government ordered the
closure of the Bingo Bahiti halls as they had
failed to comply with the terms of their licences.
The company was hit with a US$3m fine and the
president of the company was arrested. Other
members of the board were also charged with a
number of offenses while prosecutors claimed
that the company had failed to pay US$500m in
taxes. In a corruption scandal which involved a
number of local lawmakers the government shut
down the bingo halls and confiscated gaming
equipment which had been operating illegally.
ONLINE
In 2012 the Bolivian government conducted a
wide ranging study into the issue of online gaming
and looked into how gaming is regulated in other
jurisdictions such as in Europe and Latin America.
However, the government took no action on the
issue after the publication of the report and the
report made no mention on how online gaming
could be regulated in Bolivia.
Online gaming remains illegal and there are no
plans to legalise online gaming in the near future.
However locals still gamble via a large number of
offshore betting sites which offer their services
locally and it is likely that offshore operators will
continue to target the market. The government has
not blocked locals from accessing offshore sites
and there are no regulations in place which punish
players for doing so.
LOTTERIES
The only institute permitted to run lotteries in
Bolivia are those still run by LONABOL which
runs a single traditional paper lottery called the
Lotería Beneficencia Salubridad, which has the
lowest turnover in the entire region. The lottery
has been present in Bolivia since 1871 and income
made from the lottery goes to the health sector.
In the past attempts to revitalise interest in
lotteries such as the creation of a special Mother’s
Day Lottery have been unsuccessful and ticket
sales have remained low. The sector is also
fragmented as LONABOL granted companies the
rights to run lotteries on its behalf. Some of these
companies have failed to award prizes to winners
which has led to a lack of confidence in the sector.
BRAZIL
CASINOS SLOT MACHINES AND BINGO HALLS
Brazil used to be world famous for its casinos—
especially those in Rio de Janeiro. Unfortunately,
every casino in the country was forced to close
in 1946, when the president banned casinos and
all gambling in Brazil (apart from state lotteries).
This, however, has not stopped Brazilians from
gambling, especially in bingo halls and street
lotteries.
Bingo halls were first allowed in Brazil in 1993
under the so-called “Zico Law.” Zico was the
nickname of famed soccer player, Arthur Antunes
Coimbra, who served as minister of sports in the
early 1990’s. Under the Zico Law, bingo halls were
permitted in order to raise tax income for ailing
sports clubs. This law was amended in 1998 by
another famed soccer player who also served as
minister of sports, Edson Arantes do Nascimento,
better known as Pele. Under the “Pele Law,” in
order to raise additional income for sports, bingo
halls would be permitted to house slot machine
parlors as annexes to their property.
Bingo halls began to spread quickly and by 2003
there were over 1,000 bingo halls dotted around
Brazil many of which were large scale. By 2004,
Brazil had around 100 thousand video gaming
machines that could be found in thousands of
bingo halls throughout the country. Although the
bingo industry was worth an estimated US$2bn
per year by 2004, the legal status of the officially
regulated 1,100 bingo halls was still uncertain.
This was because although the Zico Law was
approved in principle, the legislation as to exactly
how bingo halls would be regulated never went
through Congress. As a result, the majority of
bingo halls remained open due to stays of closure
or were granted a license by the local government
where they were located.
In 2004 President Lula da Silva and his party
created a commission to look into more fully
regulating the sector. Under new proposals, tax
income made from the industry would have been
designated to combat poverty; the administration
also appeared to be paving the way for other types
of gambling. Unfortunately, in the same year, the
bingo industry became the focal point for one of
the worst corruption scandals in Brazil’s history
when it was discovered that there were links
between bingo halls and organised crime. Worse,
gangsters who had made their fortunes running
numbers via the so called “Animal Game” had not
only become involved in the bingo industry, but
they were also found to be bribing members of the
Worker’s Party (da Silva’s party) and other high
ranking government officials in return for stays of
closure and influence.
The corruption scandals revolving around bingo
halls so early in da Silva’s administration had a
profoundly negative effect on the industry as a
whole. The president was forced to do an about
turn, and in 2004 he announced his intention to
close all bingo halls and slot parlors throughout
the country. This led to a massive wave of protests
nationwide, as the closure of bingo halls meant
that 30,000 people would lose their jobs.
The act was later declared unconstitutional by the
Brazilian Senate, and since then bingo halls have
remained open pretty much as they were before
2004. That is to say, in a state of legally enforced
limbo. This is because the six hundred bingo halls
in Brazil have largely been able to remain open by
individual judicial order or via specific legislation
now in place in several Brazilian states.
In November 2011 before President Rousseff’s
new administration went into office, legislators
who were allied with the government put forward
proposals that were quite similar to the suspended
legislation of 2004. Under their proposals, the
industry would be more closely regulated and
tax revenue generated per year from the bingo
halls and slot parlors would be designated to fight
poverty and improve the health sector.
New legislation was then put forward in
December 2011 to allow bingo halls and slot
parlors. Under the new bill, slot machines and
bingo games would have to return 70 per cent
of the stake back to the player and 14 per cent of
gaming tax revenue would be destined for the
health sector. But the law was ultimately rejected,
by a majority of 212 to 144, under accusations that
the industry had illegally sought influence among
members of the Lower House and claims that
bingos in Brazil were used for money laundering
and only added to the problems of organised
crime.
All the same, there were renewed moves in
the Senate to further regulate the sector and
green-light casinos soon afterwards. According
to proposals put forward by Senator Mozarildo
Cavalcanti, casinos would be permitted in certain
underdeveloped zones in order to increase
tourism. In separate legislation put forward
in February 2012 bingo halls would also be
permitted. Slot parlors would not, however, be
allowed. This was not the first time that legislation
had been put forward and in fact, similar
legislation to allow casinos had already been on
the table in the Senate for more than three years.
The real problem was that the executive branch
had shown a reluctance to become involved in
such a divisive issue ever since the bingo scandals
first broke in 2004. However local lawmakers
were becoming increasingly aware of the tax
income generated by their neighbours via gaming.
As a result another attempt to regulate the
industry in the senate came in 2014 when Senator
Ciro Nogueira, put forward legislation that would
authorise casinos, bingo halls and betting around
the country. The law would put stiff penalties
in place for non compliance including jail
terms. Crucially the bill would also legalise the
famous “Animal Game” which is estimated to be
worth billions of dollars each year. The game is
particularly popular in Rio de Janeiro where it is
currently controlled by clandestine and criminal
organisations. The lottery-type drawing has
been illegal since 1946 in 25 of the 26 states with
Paraiba being the only state where the game is
legal and regulated.
According to Senator Ciro Nogueira a state
regulated gambling industry would increase tax
revenues, create jobs and promote wealth and
the legalisation of the animal game would loosen
criminal control over the game. The purpose of the
bill was to “legalise what today exists even if it is
hidden,” according to Nogueira and the bill sought
to establish clear rules when it comes to both
7
the online industry and the land based industry.
Arguing that Brazil now remains one of the very
few member nations of the United Nations who do
not allow gambling, the bill was submitted to the
Committee on Regional Tourism Development in
the Senate. It was initially believed that this law
would remain stalled but events took a surprising
turn last year.
THE NEW LAW
While it was initially believed that Senator Ciro
Nogueira’s law would in all likelihood languish
in the committee stage for several years there
could well be fundamental changes to Brazil’s
gaming law this year and a move is under way
to push forward Senator Nogueira’s law as a
matter of urgency. Indeed events are now moving
at a fast pace with Brazil closer than ever to
allowing casino gaming. This was after it was
revealed in September 2015 that Brazil could
legalise gambling in order to raise money and help
weather the current recession. Brazil’s economy
has slumped to a 25-year low with GDP falling by
3.8 per cent in 2015. . The government estimates
that a regulated casino industry could generate
R$20bn in the first year alone.
In September the government unveiled a US$7bn
package of spending in order to boost the
economy. In the same month President Rousseff
and several cabinet ministers met with party
leaders from the alliance to see if new proposals
which would allow for gaming in Brazil would
have their approval.
It did and pro gaming legislation based on the bill
initially put forward by Senator Ciro Nogueira in
2014 was then put forward to a special committee
in the Senate as part of “Brazil Agenda” a
business-friendly agenda which is designed to
provide a much needed boost to economic growth.
In December the Special Committee on National
Development approved the new bill. The bill
proposes the legalisation of casinos, bingo halls,
slot parlours and the “Animal Game.” The text
defines the types of gaming that can be played
in Brazil, the criteria for how licences are to be
granted and the rules for the distribution of prizes
as well as how gaming is to be taxed in the future.
According to the wording of the new bill casinos
must be part of larger leisure complexes, with
hotels and restaurants. 35 casinos will be allowed,
with at least one per state while some states will
be permitted to have as many as three, depending
on the population and the economic outlook in
each state. The resorts will only be permitted to
use 10 per cent of the available space for gaming
while the remaining space will be used for
restaurants, shops, theatres, exhibition space, as
well as others facilities. Bingos will be permitted
in municipalities with more than 150,000
inhabitants while the “Animal Game” will be
8
regulated by municipal governments which will
also be responsible for tax collection.
out in the face of other types of gambling such as
lotteries and bookmakers.
In March the committee approved a number of
minor amendments to the legislation and it is
is now set to go before to the lower house for
debate where new gaming legislation is also being
looked at in the committee stage. The special
commission tasked with drafting the regulatory
framework for gaming in Brazil held a public
hearing in February to hear the opinions of experts
from abroad in order to more fully understand the
operation of casinos and how gaming is regulated
in other countries.
Jockey Clubs own racing tacks and are responsible
for running them and each track is granted a
licence to offer horse race betting in betting shops
in the area in which they are licensed. Nationwide
there are now over one hundred and fifty betting
shops which are officially recognised by the
Brazilian Jockey Club and there are now four
tracks nationwide.
At the same time the Ministry of Tourism is
carrying out a survey into the impact of the
legalisation of casinos and bingo halls throughout
Brazil. At the request of the executive branch,
the Ministry of Tourism began the study late last
year in order to support the proposals that the
executive branch will eventually put forward
in Congress. It is believed that the executive
will initially attempt to authorise the opening of
casinos in hotels and will use the findings of the
report to defend its new policies.
However President Dilma Rousseff’s future
looks increasingly uncertain after the the lower
house voted overwhelmingly to remove her from
office in April this year. For now it is unclear how
this could affect gaming legislation. According
to senators present at a meeting with President
Dilma Rousseff in February, the President is in
favour of new legislation which would green
light gaming in Brazil. However Rousseff has not
publicly come out in support of green lighting
casinos and pro gaming legislation is not tied
to her political future. In addition consensus is
growing for the new bill and it could well go ahead
despite the growing crisis.
BGC UPDATE
According to the public statements made by
Federal Deputies Nelson Marquezelli (initiator of
the law currently being discussed in the gaming
commission) and Elmar Nascimento (President
of Senate’s Special Commission on Gaming
Regulation) during the 2nd Brazilian Gaming
Congress on May 11-12 in Brasilia, the gambling
bill is scheduled to be voted out of the committee
with a 100% support by the end of May, then in
June in the lower house to be passed for approval
by Senate in the second semester of 2016. The
bill is expected to end up on the President’s desk
by October. According to those close to the new
president, Michel Temer, he is in support of the
quick passage of the bill.
HORSE RACING AND OFF TRACK BETTING
Like many jurisdictions in Latin America the
Brazilian horse racing is in decline. The golden
age for the industry came between the 1950’s and
1980’s but the industry has for years been losing
The sales volume stand at around US$193m, while
estimations of Spanish company Codere put the
potential market at US$542m. Of the R$1bn that
racehorses generate a year in revenues, the stakes
represent R$600m. The remaining R$400m come
from animal husbandry, trade and auctions.
Besides the Jockey Club de São Paulo, the main
racecourses are Gavea in Rio de Janeiro, Cristal
in Porto Alegre, and the Tarumã rack in Curitiba.
Codere has 10-year exclusivity agreements with
some of the main national Jockey Clubs through
licences granted by the Ministry of Agriculture
allowing the company to broadcast races live in
the company’s sports betting shops. Codere began
its operations in Brazil in 2005 with a proposal to
develop horse racing.
Under brand name Turff Bet & Sports Bar Codere
in 2006 announced its intention to open thirty
sports betting shops in Brazil over the next ten
years. The company now runs a total of seven
sports betting shops in Brazil. These are located in
Pelotas, Porte Alegre, Rio de Janiero and Curitiba.
In 2014 Codere reported income of €2.8m and
EBITDA of €(0.4)m from its horse race betting
operations in Brazil.
Although tracks in some case have had to sell
off assets in order to pay off debts they have
managed to survive and their global potential is
only now being tapped into via recent agreements
to simulcast Brazilian races worldwide. Through
a number of agreements Brazilian race tracks
are now being broadcast live around the world
commingling local races into single pools betting
which means that the industry could benefit from
modern, global pari-mutuel industry standards.
And those outside of Brazil can now bet directly
on the outcomes of Brazilian horse racing for the
first time
In May 2015 the Rio Grande do Sul Jockey Club in
Brazil also announced the launch of a totalising
system that allows the simultaneous transmission
of horse racing in Brazil and Uruguay with realtime interaction. The new system will allow
customers to bet into one common betting system
from either Uruguay or Brazil. The new system
will link betting from races taking place in the
Cristal Race Course in Porto Alegre, Brazil and
with those from the Maroñas and Las Piedras
racetracks in Uruguay. The initiative marks an
important moment in the Latin American horse
racing industry as for the first time in history
two gaming markets in Latin America will be
integrated through a totalizing system which
places both tracks in Uruguay and the Cristal
Race Course into a single system of pari-mutuel
simulating.
SPORTS BETTING
While gaming online is banned and there have
been a number of moves put forward in both the
Lower and Upper House to block internet access
to offshore betting sites, the huge popularity of
online sports betting has made the government
rethink the issue and consider proposals which
would not only provide the national lottery
organisation of Brazil (CAIXA) with the right to
offer online games but would also end the ban on
land based sports betting as well.
Sports betting remains banned under Brazil’s
gaming laws and the only legalised form of sports
betting (apart from a small number of Codere
horse race betting shops) is via lottery type games
offered by CAIXA. This is nowhere near enough to
meet demand and Brazilians have been tuning to
offshore gambling sites in increasing numbers.
The impetus to regulate both the land based and
online industry is linked directly to the declining
fortunes of Brazilian football clubs which owe
almost a billion dollars in back taxes. In January
2012 CAIXA along with the Ministry of Finance
began to look at ways to offer sports betting online
and in sports betting shop where locals would be
permitted to bet on the outcome of local football
matches. One of the most significant findings
during its investigation was that the amount bet
offshore on Brazilian sports was six times the
turnover recorded by Timemania — a CAIXA run
sports betting game designed specifically to raise
cash for local struggling football clubs.
Brazil’s gambling laws would only grant the
Brazilian state lottery the right to offer sports
betting via a third party.
As a result so far the government response to the
issue reflects the somewhat conservative mood of
the country with a tendency to keep the 1946 ban
in place. As a result while the market seems to be
opening up it is only opening up slowly and the
sports betting offer is still extremely limited. It is
believed that for now that sports betting could be
expanded but will be limited short term to CAIXA
products. This is a far less controversial solution
than green lighting sports betting via the internet
or in bookmakers.
ONLINE
Although online gambling is currently banned
in Brazil it is estimated that Brazilians gamble
around US$600m a year via offshore sports
betting sites. Today it is estimated that about
8.7 million Brazilians play some form of online
gambling.
While online gaming has grown there have been a
number of moves in both the Senate and House of
Representatives to ban online gambling outright
with the latest attempt in the Senate to ban online
gaming coming in 2012. However since then
government sponsored studies have consistently
proven that the government has been losing out
on millions in tax revenue and the government
has sought a more pragmatic approach when it
comes to the issue of online gaming.
The latest development came in in May 2015
when the special committee of the House, which
is responsible for strengthening the Program
of Olympic Sports, met to try to adopt text that
would create the Fiscal Responsibility Law of
Sports. The project includes, among other things,
the legalisation of online betting on football
matches.
As a result momentum began to quickly grow
around the issue and later in the same year
during a debate in a public hearing held by the
Commission for Tourism and Sports in the House
of Representatives a number of legislators argued
that the opening up of the market would not
only be able to generate additional revenue from
licences but clubs could also benefit enormously
from sponsorship deals with offshore betting
companies.
According to the draft proposals, bets would
be permitted during Brazilian Championship
matches such as, the Brazilian Cup and the State
Championships and could be managed by Caixa.
Under the proposal, 16 per cent of the proceeds
would be allocated for investment in sports in
primary schools. According to the proposals
money generated by online football betting would
be destined for the government and for football
clubs so that they could pay off their debts.
However, the government only looks prepared to
go so far when it comes to opening up the market.
Despite initially promising signs it is becoming
increasingly apparent that the government will
seek to create a government monopoly over
both the online and land based industry and that
CAIXA will be the sole operator of both. Under
current proposals now being considered by The
Finance Ministry any bill that would change
In addition Senator Ciro Nogueira’s bill which is
now being debated in Congress would allow for
online gaming although for now the terms and
under what conditions sports betting would be
allowed remain vague.
While the main focus for debate has been on the
land based sector some foreign companies are
already moving to take advantage of the market
should Brazil liberalise the market. Earlier this
year Codere launched a portal for online gambling
in Brazil in collaboration with the Jockey Club
of Porto Alegre. The website launched in its beta
stage in order to take advantage of the possible
legalisation of gambling in the country.
However, those targeting the market from off
shore could encounter obstacles in the future
thanks to the Brazilian Internet Bill of Rights
which was passed in April 2014. The bill made
all online transactions subject to Brazilian law
and gave the state the authority to block sites
accused of flouting local conventions. The bill sets
to implement restrictions on the use of unlicensed
online gambling and sports betting operators. This
could give the government more power when it
comes to targeting offshore operators and would
give authorities the right to block foreign websites
LOTTERIES
In Brazil the largest state owned bank runs
lotteries while a number of state lotteries are still
also permitted. The Federal Lottery was set up in
Brazil as a monopoly in 1961. Caixa Econômica
Federal, known locally as CAIXA, is the biggest
public bank in Latin America.
In addition to Caixa, states are also permitted
to operate their own state lotteries and they
outsource running of their lottery operations to
outside companies. Around half of the income
generated by CAIXA run lotteries is ploughed
back into Brazilian society and is channelled to its
beneficiaries.
The CAIXA lottery sales network is extremely
well developed and extensive and encompasses
the entire territory. In Brazil there are a total
of 45,333 CAIXA lottery shop terminals which
register an average of 13.7 million transactions
per day. These include lottery and non-lottery
related transactions. There are now 35,000 service
outlets nationwide including 13,251 lottery shops.
Brazilians can also pick up benefit cheques
at lottery offices and carry out basic banking
services giving lottery outlets greater appeal.
For now betting on CAIXA’s products is limited
to its internet banking system. However, plans
are underway to offer all of its products online
so that the entire federal lotteries portfolio
will be available on virtual channels including
Smartphones and tablets. Online availability of
lotteries is now being developed as a priority and
it is hoped that once in effect that it will attract a
wide number of newer players and should have
appeal especially amongst those who are not in
the habit of visiting lottery shops.
A number of other changes could also soon be
on the way with the Brazilian government now
looking to privatise instant lottery tickets in order
to increase revenue. Instants are currently run
9
by CAIXA. According to government sources, the
privatisation of instant tickets would generate
revenue of between R$2.2bn and R$4bn a year
while annual revenue for the government would
stand at around R$1bn. Under present plans now
being studied in the Ministry of Finance a private
company would be permitted to develop the
business after an initial public offering (IPO) or
after a licence tender process was carried out.
In addition in August 2015 the government passed
a new law which allowed for a new football
themed instant game in order to raise revenues
for cash strapped football clubs called Lotex. The
legislation affects the renegotiating of millions
of pounds in back taxes owed to the government
by football clubs and is predicted to ensure better
management of the sport in the future.
In March President Dilma Rousseff extended the
themes for Lotex with immediate effect so that
from now on the game is not restricted to football.
Consequently Lotex can now be based around
holidays, cultural events and licensed fictional
characters as well as other themes in order to
increase the commercial attractiveness of the
product
CHILE
CASINOS AND SLOT MACHINES
In 2005, the Chilean Congress passed its most
significant gaming law in the nation’s history. The
law, first driven by the administration of then
President Eduardo Frei, had been on the table
since 1999 and was aimed at regulating casinos,
increasing their numbers, and more equally
distributing the tax revenue they generated.
After an extremely turbulent time in both the
Senate and Chamber of Deputies, the law was
finally passed in 2005 and operators were
invited to bid for the 18 new licenses on offer.
The law, known as Act N° 19.995, also created
an independent gaming commission called the
Superintendencia de Casinos de Juego (SCJ), which
would be responsible for regulating the industry.
to have adjoining amenities ready. However,
in many cases operators applied for and were
granted permission to expand the investment in
their wider facilities on offer surrounding their
gaming operations.
where they are based. In addition, the statute
provides that from that date onwards, those
municipalities will continue to be a home to a
casino for a total of three periods of fifteen years
each.
As a result, many of the new casinos in Chile are
part of a brand new five-star hotel and wider
entertainment facility. Indeed, some of the new
casinos not only offer gaming in a Las Vegas-style
setting, but they also boast conference centres,
bars, restaurants and, in one case, even a museum.
Once the last period expires, a license may be
renewed for successive periods of fifteen years
unless it is opposed by the Resolution Council of
Chile, which is a committee made up of members
of the lower and upper house. The new law
comes as part of a wider package, which seeks
to regulate the industry more closely, and the
municipal casinos will eventually come under the
supervision of the SJC.
One of the reasons it took so long for the law
to be approved by both Houses of the Chilean
Congress was the issue of exactly how the casinos
would be taxed and how those taxes would be
divided. Before the new act was approved, tax
income generated by casinos went directly to the
municipality in which the casino was located,
providing major sources of revenue to local
governments. Under the new act, gaming tax
income generated by the new casinos would be
divided between the regional government and the
local municipality while the casinos which were
already present in Chile would continue to come
under the supervision of the municipalities.
Apart from the municipal casinos there are now
sixteen casinos which come under the supervision
of the gaming board. According to the latest
statistics released by the gaming board in January
gross gaming income stood at $25.7bn (Chilean
pesos) an increase of 8.3 per cent compared to the
same month last year. The SJC also reported in its
latest annual report that casinos in Chile recorded
an increase in revenues in 2015 of 14.3 per cent
compared to 2014.
Before 2005, there were seven casinos in Chile,
which combined generated about US$85m
in gaming revenue per year. The new law
green-lighted-large scale casinos with both
slot machines and table games. As the law was
designed to help stimulate tourism, it was decided
that five types of gaming would be allowed on
casino premises: bingo, cards, roulette, dice and
slot machines.
The casino industry will also see a major
expansion in the coming years. While Chile’s
gaming law of 2005 allowed for the construction
of eighteen additional casinos, the seven
municipal casinos which were already in
operation before 2005 were facing an uncertain
future as their licences officially expired on 31
December 2015. However the seven mayors from
the seven municipalities which operate municipal
casinos in Chile organised a high profile campaign
in local media in order to ensure that their cities
did not lose out on gaming tax revenue in 2016.
Officials warned that changes in licensing could
have a significant impact on the local economy
as they could lose out from 20 to 40 per cent of
yearly revenue should they lose their casino
concessions.
Licenses for the new casinos run for 15 years,
and during the bidding process the absolute key
to winning a licence was an operator’s ability to
prove that its project would significantly increase
tourism in the area. Once the license was granted,
the operator was given two years to get the casino
up and running and an additional three years
The campaign paid off and in August 2015 the
President of Chile, Michelle Bachelet, signed into
law new regulations, which extended the licenses
of the seven municipal casinos until December
2017. President Bachelet justified the new law
by saying that the casinos in the municipalities
already play a significant role in the communities
10
In March the SJC published the requirements for
the upcoming tender process for the municipal
casino licences. In a statement published on its
website the SJC’s Resolution Council laid down
the minimum requirements for the new licences
including a guaranteed minimum financial bid
depending on the size and location of the new
casino. This varies from US$526 thousand (for the
casino located in Puerto Natales) to a maximum
of US$22.3m (for the casino located in Vina del
Mar) in order to “foster greater competition”
within the industry. In addition the SJC will take
into account and welcome any additional projects
connected to the casino which will improve
tourist infrastructure.
According to estimates released by the SJC, the
new tender process could help raise tax income
generated for the state by the new casinos by
as much as 46 per cent on average while gross
gaming income (which will be divided equally
between the municipality and the state where
the casino is located) will increase by 20 per cent.
This will herald in a number of new large scale
casinos especially as a number of the municipal
casino licenses, such as the licence for Vina del
Mar, are located in the most popular local tourists
destinations.
One persistent problem for the gaming board,
however, has been the continued growth of
illegal gaming in so called “neighbourhood slots”
which have been able to grow quickly as local
governments have not drawn a clear line between
slot machines and Skill with Prizes Machines.
Despite the fact that slot machines outside of
casinos are strictly prohibited in Chile’s Gaming
laws of 1995 slot machines outside of casinos have
grown in number considerably. It is estimated
that there could be as many as 150,000 illegal slot
machines located in slot parlours with a further
50,000 slot machines located in small businesses
and shops.
HORSE RACING AND OFF TRACK BETTING
There are eight racetracks in Chile. The two largest
tracks, the Hipódromo Chile and the Club Hípico
de Santiago, are located in the capital. Horse
racing is in decline but there have been some
improvements in off track betting via the Teletrax
network which offers live broadcasts on horse
race in betting shops throughout Chile.
Teletrax also allows customers to make a wide variety
of bets online and provides HD broadcasting of races
via the internet. Chilean company Sportech is in charge
of developing the online service and the product went
live in January 2015 with good results in its early stages.
Both the Hipódromo Chile and Club Hípico de Santiago
– now offer locals the chance to bet on horse races
staged at each racetrack online.
There are around 200 Teletrax betting shops
dotted around the country and around US$150m is
bet on horse racing on the four racetracks that are
part of the Teletrax network.
SPORTS BETTING
Sports betting shops are not permitted in Chile and
there is tremendous room for growth in the land
based sports market. In addition there is very little
to indicate that the government intends to open up
the land based market further even though there
have been a number of proposals put forward
to regulate the online industry in the National
Congress. For now sports betting is limited to
games offered by the lottery.
In Chile FOB sports betting was first offered by
lottery company Polla Chilena de Beneficencia
which runs lotteries on behalf of the Chilean
government. The company was first authorised
to offer football pools betting in 1975 under brand
name Polla Gol. However, due to a steady fall in
popularity the product was temporarily taken off
the market in 2004 and then re launched allowing
customers to make bets online through the Polla
Gol website. Polla Gol allows customers to bet on
the results of national and international football
matches. In 2007 the company launched a new
FOB product called Xperto which quickly became
popular in Chile and allows players to bet on the
outcomes of a much wider number of sporting
matches including international events such as
the NBA. Although these games are popular they
make up a small proportion of lottery income.
BINGO
Bingo halls are permitted as long as they are
part of casinos and a number of casinos in Chile
have bingo halls attached. While bingo was until
recently only allowed under special licence by
charitable organisations today there are over
2,000 bingo seats nationwide. Bingo is aided
by the fact that the game fits in well with local
government policy when it comes to gaming in
Chile. Due to the more sociable nature of the game
and low stakes involved bingo is often seen as a
lighter more accessible betting option and bingo
in Chile is seen to be in keeping with legislation
which seeks to promote casinos as wider
entertainment centres.
Although bingo in these establishments accounts
for only around 0.3 per cent of GGY the game has
since proven to be an integral part of the newly
revitalised gaming industry in Chile as it fits in so
well with the aims of the gaming act of 2006. The
majority of the casinos in Chile now include bingo
parlors some of which are large scale with the
largest housing over three hundred bingo seats.
ONLINE
While online gaming is expressly banned under
its gaming laws of 2005 Chileans gamble an
estimated US$12m a year online and many
operators have already made significant inroads
into the market even though the government
has been quick to sanction any online gambling
company which have sought to promote
themselves in local media.
For some years lawmakers have been eyeing
European legislation to see the outcome of the
liberalisation of the market in places such as
Spain, Italy and France and could in the future
begin to offer licences to offshore companies
looking to get on board. In June 2012, Senators.
Antonio Horvath and Ricardo Lagos submitted
legislation that would grant have granted a limited
number of online licenses to casinos that are
already licensed to operate in Chile. In 2013 their
plans were put before the the Finance Committee.
The law also proposed regulatory standards, both
for operators and players alike. While introducing
the bill the senators highlighted the fact that:
“The situation created by the emergence of new
technologies and remote channels, has led to
the appearance in the gaming market of new
operators for which the current legislation does
not provide adequate regulatory control . . .” and
added that “this growing form of online gambling
on offer has generated the need to establish clear a
regulatory framework.” The law however became
stalled in the Senate and was never passed.
Other proposals on how to regulate the industry
have come from the lottery. In September
2012, Polla Chilena - the Chilean State Lottery
requested that the government grant it licenses to
run an online casino. According to lottery officials,
this would help the lottery adapt to current
market conditions and would also curb illegal
betting via unlicensed offshore betting sites.
However despite the very real need to address the
issue and proposals coming from different sides
the government has not taken a clear stance on
the issue and Chileans continue to gamble via
offshore betting sites.
LOTTERIES
Polla Chilena de Beneficencia is a state owned
company that operates and administers national
lottery games including Lotto, numbers draws
and instants as well as sport betting games
in Chile. Polla Chilena is now one of the most
important state owned companies in Chile and
its product sales account for over 63 per cent
of the lottery gaming market. In January 2016
Intralot signed a contract with Polla Chilena for
the management of its online games. Under the
terms of the agreement the company will redesign
Polla Chilena’s online gaming portal and offer an
updated number of mobile applications, for lottery
and sports betting to Chilean players. It will also
update the lotteries sports betting games such as
Xperto.
The only other company that is authorised to run
lotteries in Chile is the Lotería de Concepción.
The Lotería de Concepción was created in 1921
in order to provide financing for the then newly
established University of Concepción. 25 per cent
of profit made from ticket sales still goes towards
the University and a further 5 per cent is divided
and shared between various charities. The Lotería
de Concepción products are Kino, Kino 5, Imán
and Boleto Lotería.
COLOMBIA
CASINOS AND SLOT MACHINES
Generally speaking Colombians really like to
gamble and it is estimated that 61 per cent of
the adult population regularly use a part of their
monthly income on gaming. According to some
estimates Colombia will need at the very least
30,000 more slot machines to meet growing
demand in the coming years.
The Colombian casino sector continues to thrive
due mainly to the approval of Law 643 in 2001
which initiated a system of control against
illegal gaming and improved the management
of resources earned from all types of gaming in
the region. ETESA, the gaming regulatory body
in Colombia, was set up in 2001 with the aim of
raising income for the dilapidated health sector.
Over the following years gaming tax revenue
increased by over 500 per cent.
Illegal gaming though was still a serious problem
in Colombia and accounted for around 20 per cent
of all bets made before 2008. Of the 65,000 slot
machines that were operating legally a further
20,000 slot machines were operating without
a licence and together were generating around
$650m a year. This provoked then President
Uribe to grant ETESA more powers to combat
illegal gaming but despite a crackdown the illegal
gambling sector continued to grow at a fast pace.
In 2009 ETESA awarded ten new gaming licences,
allowed nine gaming centres to expand their
operations and renewed twenty two contracts.
Gaming licences were awarded for a minimum
of three and a maximum of five years and were
renewable. However casinos and slot parlours
nationwide were hit with an extra tax in February
2010. In order to raise a half a billion dollar
shortfall in the health budget the government
11
imposed a series of taxes as part of an emergency
health care bill. Taxes were hiked on cigarettes,
alcohol and gambling and were designed to
provide emergency funds through until the end of
2011. For casinos VAT was raised from 5 per cent
to 16 per cent.
There was more bad news for the industry in late
2009 when newspaper reports began to emerge
accusing ETESA officials of extorting casino and
slot parlour owners. Several arrests were made
and a full scale enquiry was launched as it was
discovered that members of ETESA were routinely
turning a blind eye to illegal slot parlours in return
for monthly cash bribes. In late January 2010
President Uribe officially announced that he had
issued a decree whereby ETESA would gradually
be phased out.
operations. According to the latest figures released
by the Colombian Gaming Control Board 40 per
cent of households have at least one gambler in
their family while the gaming industry generates
revenues of more than $10bn pesos a year and has
grown on average between 4.5 and 5 per cent per
year.
Slot machines, casino games and bingo are
granted permission to operate via licence on a
concession basis to any private company that is
able to operate them. Casinos in Colombia are
categorised in the same way as slot parlours. A
fixed monthly fee per slot or gaming table is then
paid to the board, whilst a sales tax is also paid on
each slot. The minimum number of slot machines
per parlour is 80. Licences can be granted for no
less than three years and no more than five.
In 2012 a new board called Coljuegos was
created. Made up of members from a number
of government ministries and with its director
directly appointed by the president, Coljuegos
almost immediately began a sustained attack
on illegal gaming with raids nationwide,
closures and the decommissioning of illegal slot
machines. Despite this illegal gaming still remains
rampant. According to a study carried out
jointly by Coljuegos and the National Federation
of Merchants (Fenalco) in 2015 at least 2,000
local businesses in Bogota are operating illegal
slot machines on their premises. This is despite
the fact that heavy penalties are now in place
for non compliance with those found guilty of
offences liable to pay of up to $50m pesos (around
US$20,000) per illegal slot machine as well as six
to eight years in prison.
Today there are an estimated 3,200 slot parlours,
bingos and casinos in the country, with 83,558
slots nationwide run by 384 licensed operators.
According to figures released by Coljuegos,
the sector reported growth of around ten per
cent in 2014 and taxes generated for the health
sector increased by 25 per cent in the same year.
According to the latest figures they generated
around U$756m in 2015.
However the outlook is looking increasingly
positive for the industry. With a larger staff, a
wider remit to enter and inspect casinos and
technological advances regarding the online
monitoring of gaming operations now at its
disposal, under current plans tax revenue
generated by the industry is set to increase over
the next two years by as much as $1bn according
to local estimates. In addition, according to a study
carried out by research group Quali on behalf of
Coljuegos, there is still a huge opportunity to bring
newer brands into the market as there is rising
demand amongst younger players and Coljuegos
is expanding the number of games that can be
played.
The online monitoring of slot machines involves a
total of 54 operators and 396 gaming operations
in all. Although the new system might bring a
greater level of accountability to the industry
local operators have been less enthusiastic with
the new move which they say has come with
a multimillion dollar price tag. Operators were
permitted time to become part of the system
gradually until all of their slot machines were
connected to the government server.
Indeed despite illegal gaming Colombia has
consistently proven to be a bright spot in the Latin
American casino industry and the number of
slot machines and casinos has more than trebled
over the last ten years. While it is estimated
that illegal gaming still accounts for around 20
per cent of all bets made in Colombia the legal
sector has continued to grow year on year with
operators such as Spanish company Codere
reporting significant growth in their Colombian
12
Slot machines are the most popular form of
gambling: 9.2 times higher on average than other
types of games. All slot machines in Colombia
are now obliged to be connected to a centrally
government controlled server. The connection of
all slot machines online was first considered in
2008 when Colombia changed its gaming laws
and was then passed into law in 2010.
HORSE RACING AND OFF TRACK BETTING
According to Colombian gaming law bets on horse
races staged either locally or from abroad are legal
and are licensed by the municipality or district
where they are located. Licences are granted for
ten years. In its heyday the horse racing industry
employed over 40 thousand people in Colombia
but a total of eleven tracks have closed over the
years due to decreasing popularity while the
industry was singled out for high taxes in the
1970’s and 1980’s with taxes ultimately reaching
30 per cent which meant that a large number of
tracks were forced to close.
However recent amendments to Colombia’s horse
racing laws are having a beneficial effect on the
industry with the opening up of thirty betting
shops scheduled to open later this year and a
major racetrack set to open soon. Amendments
to Colombia’s horse racing laws will cut taxes to
just one per cent, extend licences for ten years
and give local municipalities more say over the
industry.
Previous Head of Coljuegos Cristina Arango
outlined the reasons for the move in November
2015 and explained why the industry tax rate
would be lower compared to the tax rate for other
popular games in the region such as Baloto – a
lottery which runs twice a week and Super Astro
– a lottery type game based around the signs of
the zodiac. “This rate is lower than Baloto which
stands at 32 per cent and compared to sports
betting which stands at 24 percent and Super
Astro which pays 10 per cent. It’s a significantly
lower rate as what we are trying to encourage
is this type of business which involves large
investments with coordination between horse
breeders horse track operates, jockeys and track
staff,” she said.
In December 2015, the government awarded
the Hippodrome San Francisco SAS the right to
operate horseracing in the department of Cesar.
The 3,000 person capacity track will be run by
a group of businessmen who will re launch the
Racecourse San Francisco, near Valledupar. The
track was also granted the right to offer its races
online and is permitted to simulcast its races in
betting shops throughout Colombia. The company
also plans to open up 30 betting shops by the
end of this year, of which half will be in Bogota
while others will be located in Medellín, Cali,
Barranquilla, Eje Cafetero, los Santanderes and
Valledupar.
SPORT BETTING
In October 2013 Coljuegos announced that
it would allow pari-mutuel sports betting.
The bidding process ended in April 2014 after
Coljuegos had carried out two public hearings
on the issue with the aim of selecting a single
national operator to operate the game nationwide.
The licence was awarded to local gaming company
Corredor Empresarial S.A. which also runs a Super
Astro. The company was granted the right to
operate pari-mutuel sports betting after winning
against GTECH (now IGT).
The company will provide the public health
sector with 24 per cent of gross sales generated
by the game which could exceed $50bn pesos
(US$26,291,483.52) over the duration of its
contract.
Pari-mutuel sports betting is limited to football
matches after an agreement was reached
with Colombia’s first division (DIMAYOR) but
it is believed that this could be expanded to
encompass a much wider variety of sports in the
future and locals can already bet on the outcome
of matches outside of Colombia. The game went
live in October 2014 and should eventually be
available in around 4 thousand points of sale
There are no bricks and mortar sports betting
shops in Colombia. Rather the sports betting offer
is strictly limited for now to pari-mutuel betting
via terminals located in lottery outlets. With the
granting of the licence for pari-mutuel betting
it is believed that the sports offer in Colombia
could begin to expand in the near future but this
expansion will in all likelihood be limited. As yet
the gaming board has given no indication that it
plans on broadening the industry to include sports
betting shops.
BINGO
In Colombia licences to run bingo halls are granted
in the same way that they are for slot parlours
and casinos, but the minimum number of seats
depends on the size of the population of the
municipality in which the bingo operates. Bingo is
becoming increasingly popular in Colombia and
the number of bingo halls has more than tripled
since 2002. The number of bingo positions grew
13 per cent from 21,398 in 2013 and to 24, 677 in
2014 according to the latest figures available. The
market leader is Codere.
ONLINE
Interactive casino type gaming and sports betting
are not allowed over the internet in Colombia.
Despite plans announced by ETESA in 2008 to
allow online betting via licensed operators or by
the state these plans were overshadowed by the
scandals that hit ETESA in the same year.
Colombian gaming law grants the gaming board
the right to offer online games on an exclusive
basis. In 2013 Coljuegos released a statement
to the press saying that it was “carrying out the
necessary studies to regulate games of chance on
the internet, in order to offer new alternatives for
the market.” The board is becoming increasingly
vociferous in its statements aimed against
offshore operators which are offering their
services locally.
In 2013, in what was to be believed to be a move
ahead of the creation of a set of new regulations,
the board issued a number of warnings
to unlicensed operators accusing them of
undermining the funding of public health services.
The board’s increasingly tough public stance on
the issue could herald major changes in the near
future. In the past Coljuegos has been strongly
protective of its monopoly over gaming and while
illegal gaming has proliferated the board is waging
an increasingly visible war on illegal gaming
in the media. It is believed that this will soon
expand to online gaming and could lead to the
implementation of a number of measures which
could include the blocking of offshore operators in
Colombia and possibly penalties on players found
to be breaking the law.
In November 2015 the then Head of Coljuegos
Cristina Arango announced a major crackdown
on online gaming and also announced plans to
block offshore gaming sites offering their services
to locals. The new rules followed the largest
crackdown in Colombian history on the land
based sector. The board plans to block sites via
local police agencies in what could herald one of
the strictest polices again online gaming in the
entire region. “We have identified around 200
sites and the idea is to control them via a program
in conjunction with the Ministry of Technology
and Information and the Cyber Crimes Police.
With them we are setting up a similar scheme to
the struggle against child pornography in order to
block these gambling pages on football, poker and
some online lotteries,” Cristina Arango said.
However, the debate on exactly how Coljuegos
would go about preventing offshore operators
from targeting the market is at an early stage in
terms of providing concrete solutions. But once
Coljuegos permits online gaming it will in all
likelihood seek to protect its monopoly and enter
into an agreement with an operator to offer online
gaming on its behalf.
In addition as part Colombia’s National
Development Plan 2014-2018 which is aimed
at setting the guidelines for growth and
improvement in the country Coljuegos began to
seek permission to offer a number of new games
such as instants and online games and sports
betting over the internet. Online games are not
covered in current gaming law and the federal
government is seeking to gain control over the
online space as it considers itself the ideal body to
launch and operate new games.
LOTTERIES
The lottery market in Colombia is extremely
varied and there is a wide and extensive sales
network throughout Colombia. The most popular
lottery games in Colombia are Chance, Baloto and
Super Astro. Combined all lottery games represent
around 1.5 per cent of Colombia’s gross domestic
product. Baloto began fourteen years ago while
Chance started over 60 years ago and Super Astro
began in 2000.
The Chance Game, also known locally as
“Apuestas Permanentes,” first began in the late
1970’s in the region of Antioquia and quickly
spread nationwide although it was illegal. It was
finally legalised in 1982. In 2014 sales for Chance
reached US$860m.
Chance is offered via a sales network Paga
Todo Grupo Empresarial en Linea S.A. (GELSA)
which is the largest privately-owned Chance
gaming company. In 2002 GTECH (now IGT
after the companies merged in 2015) and GELSA
joined together to officially launch ‘Apuestas
Permanentes’ (Chance), utilizing GTECH’s
technology. In January 2011 GTECH announced
that it had signed a five and a half year contract
extension with Grupo Empresarial en Linea S.A.
(GELSA), to continue providing online lottery
technology and commercial services in Colombia.
Baloto runs twice a week and there are around
10,000 points of sale nationwide in 420
municipalities in Colombia. GTECH was initially
awarded a 10-year concession contract to bring
the Baloto game to Colombians in December 1999
and the first draw was held in January 2001. In
its first ten years GTECH recorded sales of over
$1.5bn pesos for the game.
Meanwhile, the current concession of Lotto game
Super Astro came to an end in April 2015 but was
re awarded to Colombian company Corredor
Empresarial S.A which has operated Super Astro
since 2010. The new licence grants the company
the right to offer the game for another five years
during which time it will return 24 per cent of
gross income back to the health sector.
Besides Chance, Baloto, and Super Astro there
are also a wide number of games offered by
each state. However, the local lottery sector per
region is in decline and the products have been
losing popularity for over ten years. They have
also been plagued by a number of corruption
scandals. The most recent of which was in March
2015 when ex head of the Lottery Board for the
state of Huila, was arrested along with a former
legal representative of a lottery firm, for alleged
irregularities in the awarding of a lottery licence
worth millions of dollars.
As a result of falling revenues and corruption
scandals it is looking increasingly likely that
local lotteries could be put under the control of
Coljuegos in order to raise revenue. As already
mentioned plans to take lotteries out of the
control of local governments and place a number
of new games under the control of the Coljuegos
are now underway as Colombia debates the
National Development Plan. If the clauses
introduced by the national government are
approved this could lead to major changes in the
Colombian lottery sector.
New plans now being discussed would affect
online gaming, sports betting and a number of
lotteries. However local leaders are arguing that
the federal government is seeking to wrestle
financial control of lotteries and other games
away from local districts in a bid to strengthen
federal authority over local districts. In all the
13
Government has introduced three articles to
Colombia’s National Development Plan 20142018 which would affect the gaming industry as
it seeks to make way for new games which have
yet to be developed on a large scale including
instant lotteries, online gaming and sports
betting. However, the Federation of Departments
have argued that plans to move lotteries
from state control to federal control would be
unconstitutional as the Constitution grants the 32
departments control and exploitation of all local
lotteries and changes to that law could not be
made via the National Development Plan.
COSTA RICA
CASINOS AND SLOT MACHINES
In common with many other countries in the
region casinos were first permitted in order to
boost tourist infrastructure and were only allowed
in hotels. The regulation of gaming in Costa Rica
began in 1922 whilst a law in 1974 saw a law
specifically for gaming and betting. In 1987 a
number of changes were introduced concerning
tax laws for casinos and gaming halls and casinos
were permitted in three stars or above hotels as
required by the Costa Rican Tourism Institute.
From the early 1990’s casino began to develop
rapidly and by 1999 there were 21 casinos whilst
in 2006 this had shot up to 46. The law for casinos
was designed initially with the tourism industry
in mind and casinos were permitted in hotels with
the number of tables and slots dependent on the
number of stars the hotel possessed. Most casinos
in Costa Rica are understated and on average
have around six table games and between 50 and
100 slots. With around 45 casinos now operating
nationwide the vast majority are located around
the most well-known beaches with another
handful located in the capital.
Unfortunately, casinos in Costa Rica have been
consistently singled out for special attention
from the Department of the Treasury and have
been hit by a series of additional taxes and
restrictions over the years. In 2011 the newly
elected government of Laura Chinchilla promised
to raise taxes in order to raise money in order
to combat growing crime and a tax hike was
proposed along with an additional yearly licence
fee for operators in 2012. The law also allowed
for the establishment of casinos outside of hotels
for the first time. Despite the fact that the bill
had the backing of President Chinchilla the law
in its original form struggled through the Costa
Rican assembly with lawmakers objecting most
strongly of all to the free-standing clause in draft
legislation.
However, casino legislation fared far better
in 2012 and revised legislation was met with
widespread approval in its second reading in
June. Passed by 42 votes to 1 the “Law on Casino
Taxation” regulates both casinos and call betting
14
centres in Costa Rica. According to the law,
new casinos are only permitted in hotels rated
four stars and above. The law also raised taxes
by imposing a 10 per cent tax on net profits on
all casinos in Costa Rica. In addition casinos
have to pay 60 per cent of the equivalent of a
basic worker’s salary (US$720) per table on the
premises and 10 per cent per slot machine. This
amounts to US$432 per table and US$72 per slot.
Due to the very high tax rate the casino industry
in Costa Rica has been showing continued signs
of decline. According to industry insiders the
industry has not been profitable for over three
years now and there have been a number of
significant closures of late due to additional
obstacles such as a smoking ban, high taxes and
illegal gaming which have forced other larger
operations to reduce their running costs. In
November 2014 two casinos were forced to close
which left 200 people out of work while a number
of casinos are running at a loss and could soon
close as well.
Faced with a declining industry in December
2014 The Costa Rican Tourism Board launched
a new campaign aimed at ending illegal gaming
on the island and began to enforce new powers
granted to it by Law No. 77 which was passed in
the same year. Violation of the provisions of the
new Act carries fines ranging from US$5,000 up
to US$10,000 per violation. In addition, criminal
penalties may also now be imposed on those
found to be breaking the law. The new act was
welcomed by operators but it has done little to
reduce illegal gaming and the tax burden still
stands. The Treasury Department estimates that
there could still be as many as 75,000 illegal slot
machines operating in Costa Rica today.
HORSE RACING AND OFF TRACK BETTING
The last horse race track in Costa Rica closed
down in 1995. Wagering is possible on races
simulcast from other countries particularly from
those in the US in the small handful of betting
locations on the island.
SPORTS BETTING
Sports betting is also permitted in Costa Rica but
the offer is extremely limited. There are only a
small handful of sports betting facilities located in
casinos.
BINGO
Bingos are permitted but funds raised are for the
Red Cross.
ONLINE
Online gaming sites may not offer their services to
locals but Costa Rica initially proved an attractive
proposition to online casino operators. This was
because set up costs were low, there was no
special tax on online casinos and foreign investors
did not pay taxes on revenues generated by their
gambling businesses. In addition there was and
still is no governmental or regulatory framework
governing online gambling. Combined this makes
Costa Rica a unique jurisdiction as companies can
operate without a gaming license.
Bookmakers were initially attracted to Costa
Rica in the 1990’s due also to the strong
technological infrastructure, educated workforce,
stable government, close proximity to offshore
banks and loose laws. By 1999 online gambling
operations were receiving on average 20 thousand
calls per week and by 2000 Costa Rica had
transformed itself into a highly significant gaming
centre and was home to around 125 online betting
businesses. This quickly increased to 300 over the
following years. Internet gaming services could
also in theory tap into the American market
The US Federal Wire Act of 1961 bans interstate
wagering via telephone or telegraphs and is
widely interpreted to legislate against online
sports gambling in the US. According to the act it
is against the law to use phone lines or wires to
place bets on sports across international borders.
However, operators flocked to Costa Rica in order
to take advantage of a supposed loophole in the
act where it is legal to use the telephone to make
a bet if the bet is being made in a country where
gambling is legal.
However in July 2006 a federal grand jury
returned a 22 count indictment against eleven
people and four corporations on charges
of racketeering, conspiracy and fraud. The
indictment accused Gary Stephen Kaplan the
founder of U.K Company BetonSports and ten
others of engaging in unlawful activity because
of the operation of their internet gambling
businesses in Costa Rica.
As a result the number of online gaming
companies in Costa Rica declined rapidly and
prosecutors and law enforcement agents continue
to pursue those involved in operating sportsbooks
in Costa Rica.
Meanwhile there have been a number of attempts
to establish a gaming control board for online
gaming and regulate the industry. President
Solis, who was elected in 2014 announced plans
to establish a gaming control board for online
gaming. The Finance Ministry has also released
draft plans for regulating the industry where a tax
would be implemented on online gaming of 0.5
per cent of gross income to help fund the control
board. Additionally, a 5 per cent tax would be
levied for the fight against crime. The new board
would report to the Minister of Interior and Police
and would process six-year gaming licenses at a
suggested annual fee of US$$50,000.
LOTTERIES
The Loteria Nacional de Costa Rica is run by
the Junta de Proteccion Social (JPS) which is a
social welfare group which operates the lottery
and other games of chance. The first lottery was
launched in 1885. Today prize draws are run
several times a week and there are thousands of
retail and street vendors. JPS runs the National
Lottery, Chances Loteria Popular, Tiempos, Pega 1,
Pega Millones, Instant Lottery, Lotto and Pitazo.
The JPS gave the concession to GTECH (now IGT)
in August 2011 to set up an online lottery system
in Costa Rica, which came into force in May 2012
and this covers the sale of electronic lottery and
sports betting. The contract, in partnership with
BOLDT Gaming SA from Argentina, is for an initial
six years with the possibility to extend for two
additional periods of two years each. GTECH
also announced plans to set up 1,000 lottery
machines throughout the country plus 400 in
the metropolitan area with outlets being open
10 hours a day at least and seven days a week.
Transactions are located in supermarkets, kiosks
and shopping centres as well as via around 400
street vendors.
ECUADOR
CASINOS AND SLOT MACHINES
In September 2010 the left wing President of
Ecuador Rafael Correa announced that his
government was seeking to ban casinos. Claiming
that casinos in Ecuador had become hotbeds of
corruption and money laundering Correa told
local press that his administration would put the
question before the Ecuadorian people as part of a
referendum. If the Ecuadorian people agreed with
the President’s views on the issue then all of the
fifty five casinos and bingo halls in Ecuador would
be closed down forthwith.
As a result of the move operators immediately
stated their opposition claiming that if the new
law was approved then it infringed upon their
property rights as enshrined by the Ecuadorian
Constitution and would also lead to a wide
proliferation of illegal gambling nationwide.
Under previous legislation, casinos operating in
Ecuador had to offer - in addition to slots - at least
four different types of table gaming in five-star
hotels and two to three types of table gaming in
three- and four-star hotels, respectively. This
was then changed in 2008 when the “Regulation
of Casinos in the Tourism Law” was approved by
President Correa. According to article 5 of this act
casinos could in the future only be part of a “hotel
de lujo” meaning in a five star hotel located in a
tourist hot spot. There were thirty two large scale
casinos which fell under this category.
A great part of the problem for the casino industry
had been the proliferation of standalone slot
machine parlors which were not attached to
casinos and which had not attracted tourists but
local players. These slot parlors were in most cases
allowed to operate via a licence granted to them
by local municipalities. At the same time the
number of illegal slot machines had expanded in
bars, nightclubs and other public places.
As a result of the rise in illegal gaming slot
machines outside of casinos were banned by
Articles 91 and 92 of the Tourism Regulation Law
in December 2002. Then in 2005 the government
decreed that any business apart from a casino
which had a slot machine had to remove it from
the premises or face prosecution. The decree also
granted the police the power to confiscate and
destroy illegal slots.
Unfortunately the government did very little
to put this law into practice with the result that
there were, according to government figures in
2008, 121 slot parlours which housed over 3,000
slot machines (although some estimates put the
total of illegal slot machines as high as 7,000).
These slot machine parlors alone employed almost
1500 people and accounted for an estimated 70
percent of the gaming market in Ecuador (not
including lotteries).
Due to the ruse of illegal gaming and despite
the fact that legitimate operators had invested
millions in upscale casinos in hotels the date of the
referendum was finally set for May 7 2011.
Almost four million Ecuadorians (47.7 per cent of
the voters) voted that that they were in favour of
banning casinos and slot parlours meaning that
many skilled and experienced casinos workers,
many of whom had been working in the industry
for almost fifteen years were left jobless. It also
meant that the government lost around US$20m
in tax revenue per year from that point onwards.
While it was initially believed that the casinos
would be given a further two years to recuperate
some of their investment, the ban went into effect
in March 2012 meaning that Ecuador’s short lived
casino industry came officially to an end.
OTHER SECTORS
There is no organised horse race betting industry
in Ecuador and there are no legally organised
sports betting shops. In addition bingo halls are
also now illegal under the new law while online
sports betting is unregulated.
LOTTERIES
Compared to lotteries in other Latin American
jurisdictions the lottery in Ecuador is small scale.
H. Junta de Beneficencia de Guayaquil, a private
non-profit charity institution founded in 1888,
has the exclusive right to promote and operate
lotteries in Ecuador and provides the charity with
50 per cent of its budget helping it to meet the
expenses and the support it provides to hospitals,
education centres, hospices, homes and schools.
As well as the economic aid it provides to the
charity, the sale of products from the Lotería
Nacional such as Lottery, Lotto, Pozo Millionario
and Raspaditas provide care to a large number of
Ecuadorians. In 2015 the institution began to offer
instants and in 2003 it began to offer a roll over
jackpot lottery called “Pozo Millonario” the results
of which are announced on television.
EL SALVADOR
CASINOS AND SLOT MACHINES
Casinos first began to operate in El Salvador in the
mid 1990’s. Licences were granted by local mayors
in the capital city of San Salvador and soon began
to spread to other cities such as Antiguo Cuscatlán
and San Miguel. According to Article 4 of the
Municipal Code, which has since been repealed
by the government, city majors had the power
to grant casinos licences and the tax income
generated by the casinos has gone directly to the
local government where they were located.
The direct licensing of gaming establishments by
city majors had made casinos arguably one of the
most controversial issues in the entire region with
the Legislative Assembly trying to close them
down all together or attempting to wrest control
of gaming from the local government to the
central government. The situation is made more
controversial still by the fact that a number of
leading politicians are strongly opposed to gaming
on principle and the majority of locals, according
to a number of opinion polls, are also opposed
to gaming. Despite this local officials continue
to green light gaming establishments in their
jurisdictions in order to generate additional tax
income while debate continues as to who should
control the industry.
The issue first came to a head in 1999 when the
Legislative Assembly banned all casinos in the
country and announced that they would close
them down within a year. However, those casinos
which had already been issued a licence before
the act of 1999 argued against the ruling in courts
and were in many cases granted stays of closure
while local government have refused to shut
down casinos operating within their jurisdictions.
Undeterred the Legislative Assembly in 2002
published an official reading of the “Police Law” (
Ley de Policía) which contained the only gaming
related legislation in El Salvador.
Dating back to 1879 Article 68 of the Police Law
expressly bans all types of gaming in El Salvador.
The Assembly reaffirmed the validity of the act
and decreed that any kind of authorisation for
the opening of gaming establishments was illegal.
It also ordered local mayors to close down all
gaming establishments in their jurisdictions. As
gaming continued to proliferate on a local level,
in 2007 the Supreme Court reaffirmed the legal
validity of the Police Law act when it came to
15
gaming. Both moves have had very little impact
on the industry as casinos and other gaming
establishments continue to be granted licences on
a local level.
The situation was made less clear still in 2011
when the government revoked the Police Law
and replaced it with “The Law of Violations and
Citizen Coexistence” (“Ley de Contravenciones
y Convivencia Ciudadana”). The new legislation,
which is designed to promote more harmony
when it comes to the law and peaceful coexistence
amongst citizens, gives more power to local
municipalities, the Attorney General’s Office and
the police when it comes to intervening in local
disputes. While the old law had been ineffective
when it came to gaming it was at least clear in that
it banned gaming. The new law revokes the ban
on gaming but covers gaming in a few sentences
stating that the marketing, the installation or
the operating of “electronic recreational gaming
machines” is banned “without permission.”
This has led to speculation that the law gives local
municipalities the right to grant licences to gaming
establishments. Under what terms and exactly
how is unfortunately not covered by the law.
Consequently gaming in El Salvador continues to
exist in what to amounts to a state of legal limbo
with casino operators urging the government to
pass a comprehensive gaming act. Unfortunately
for now there are no signs of this happening in the
near future.
OTHER GAMING SECTORS
Other sectors of the industry are extremely
underdeveloped. There is no horse racing
industry, only a small number of bingo halls and
no developed sports betting industry. In addition
there is no online gaming regulation currently in
place.
LOTTERIES
The Lotería Nacional de Beneficencia de El
Salvador operates the lottery. It is a government
agency originally created to help generate
funds for the hospital of San Salvador and now
contributes to many different social programs.
However, its product offering is limited to instants
and a traditional roll over jackpot lottery called La
Millonaria which was first launched in 2003. The
game has become increasingly popular due to the
increased prizes on offer which have now risen
to US175,000. Instants known locals as Lotins are
particular popular and are supplied by Oberthur
Gaming Technologies.
GUATEMALA
Although gaming is expressly forbidden by
article 477 of the Penal Code which puts in place
heavy fines and prison terms for those found to
be operating casinos or slot parlours, gaming has
proliferated widely throughout Guatemala and
slot parlours have swiftly spiralled out of control
16
unchecked and have, as a consequence, been
infiltrated by organised crime. Known widely as
“video loterías” slot parlours in Guatemala also in
a great many cases house table games and can be
large scale.
While there are no official statistics it is believed
that the illegal gaming industry could be worth
over US$120m a year and while there have been a
number of attempts to crackdown on the industry
they have proved ineffective. The situation is
made worse still by the fact that although the law
prohibits the existence of casinos, video lotteries
are often granted a licence via administrative
decisions made by members of the Interior
Ministry. This is despite a decree published in
2006 by the Interior Ministry itself which ruled
that such licences should be revoked.
In the face of such a chaotic landscape there
have also been a number of legislative attempts
to regulate the industry and progress is being
made to pass a new gaming law albeit slowly. In
2011 members of the Partido Unionista, brought
forward a bill to Congress which would legalise all
gaming establishments in the country so that the
government would be able to regulate the industry
and combat money laundering. The proposal,
which received a favourable opinion by the
Commission of Economy, Trade and Government
in 2012 also proposed strict controls over who
could run gaming in the country as well as a 10 to
20 percent tax on monthly income.
In September 2014 the Economic Committee of the
Guatemalan Congress issued a favourable opinion
on an initiative that seeks to regulate gaming
in casinos, video lotteries, and bingo halls. The
bill seeks to create two regulatory bodies which
would be responsible for the monitoring and
control of the industry. The National Commission
of Gaming (Comisión Nacional de Juegos de Azar)
would be made up of members from the Ministry
of Economy, the Tax Office, The Superintendent
of Banks, the Guatemalan Institute of Tourism as
well as a second gaming body which will be called
the Superintendence of Gaming.
This body would run a decentralised oversight
of gaming, investigate licensing and ensure the
implementation of administrative and judicial
actions or steps necessary for the collection of
all tax revenue, license fees and the collection
of fines for non compliance. In addition the law
also contains clauses which prohibit the entry of
those who are under the influence of alcohol or
drugs and includes strict anti-money laundering
measures.
The bill not only proposes a new gaming board
but also seeks to impose a specific tax for gaming.
The new law proposes a US$800 per month fee
per gaming device with a value of less than or
equal to US$15,000 and a fee of US$1,500 for any
gambling device the value of which is less than
or equal to US$15,000. For devices that are worth
more than or equal to US$30,000 the fee would
amount to US$3,500. A tax will also be imposed
on all winning bets. Although the bill seemed to be
gaining ground in the Guatemalan Congress it has
lost impetus and is still awaiting approval. In the
meantime the government has not addressed the
issue further.
OTHER SECTORS
Other sectors of the gaming industry remain
unregulated and underdeveloped. There is no
horse racing industry and there are no legally
established sports betting shops either. There are
only a very small handful of bingo halls and online
gaming is not regulated.
LOTTERIES
The Santa Lucia lottery is the only lottery in
Guatemala and runs a total of twenty five
separate lottery draws. Money raised goes to help
the deaf and blind. Each year the lottery runs 40
draws with a prize of Q600,000 (Quetzal). Four
draws with a prize of Q2.2m and five draws with a
prize of Q1.3 m. The lottery also offers one annual
draw with a prize of Q3.5m and another annual
draw with a prize of Q4m.
HONDURAS
CASINOS AND SLOT MACHINES
Gaming in Honduras remains very small scale
and gaming law has remained in many way
unchanged since 1977 when Honduras passed its
first gaming act. The act was designed specifically
so that casinos would attract more tourists and
improve tourist infrastructure and allows for table
for both games as well as slot machines. Licences
are valid for twenty five years and are renewable
after that period every five years and casinos
must be part of a five star hotel or resort. The law
has been amended twice: in 1988 the government
amended the law raising the age limit from 18 to
21 but the most significant change came two years
later in 1990.
Although the law was designed to promote
tourism it was found that casinos were marketing
themselves almost exclusively to locals and
not to foreign tourists. As the vast majority of
visitors were locals the government changed
the law making it illegal for Hondurans to play.
Consequently, there are only three fully-fledged
casinos which cater exclusively to tourists. They
are located in the three largest cities of Guatemala:
La Ceiba, San Pedro Sula, and capital Tegucigalpa.
Calls for a repeal of gaming laws in Honduras
began to grow in 2014 amongst claims that the
industry is not paying enough tax and is being
used for money laundering. Deputies belonging to
the Partido Anticorrupción (Anti Corruption) Party
allied alongside members of the Libre (Free) Party
to call for major reform which would affect both
casinos and slot parlours nationwide. Together
they called for a repeal of gaming laws arguing
that the industry does not generate sufficient
income for the treasury and also has a harmful
effect on many people especially the poor due
to gambling addiction. In addition, they argue
that taxes for slot machines were reduced too
dramatically under the previous administration
from US$1,300 to US$210 - a reduction of almost
80 per cent compared to the previous rate.
In September in the same year a major new
proposal to change Honduras’s gaming law was
put forward by Deputy Augusto Cruz. The new law
would re-establish the previous tax rate which
would affect slot machines in casinos, grocery
shops, convenience stores, markets, bars, cafes
and restaurants as well as other establishment
nationwide. The new tax rate, once in place, would
be managed by the local mayor’s office. However,
the proposals were not adopted and there has
been no impetus coming from any of the political
parties to address the issue since then.
OTHER SECTORS
Other sectors of the industry remain extremely
underdeveloped. There are no laws in place to
legislate over online gaming and while bingo is
allowed there are only a small handful of bingo
halls. In addition there is no organised government
sanctioned sports betting and no organised horse
racing industry.
LOTTERIES
The state run lottery which began in 1892 is very
small scale and only offers two traditional lottery
games: La Chica and El Grande.
MEXICO
CASINOS AND SLOT MACHINES
Gaming law in Mexico dates back to the Betting
and Raffles Law of 1947, that banned casinos and
gaming throughout Mexico. While there have
been almost innumerable attempts to replace the
act, all attempts have failed thus far. But although
slot parlors and bingo halls are ostensibly banned,
that doesn’t mean that there are no slot parlors in
Mexico. In 2005 Vicente Fox, who was President
at the time, attempted to do away with the old
gaming act. While he was ultimately unsuccessful
he did manage to insert an amendment in the
form of an appendix to the old law that allowed
for sports betting, as well as the opening of bingo
halls and slot parlors nationwide. The Secretary of
Government (SEGOB), Mexico’s interior ministry,
was given responsibility for the granting of
licenses for these betting facilities. While there
was initial controversy surrounding the large
number of licenses initially awarded by then-head
of SEGOB Santiago Creel, his decision was upheld
by the Mexican Supreme Court in 2007. By the end
of the following year, the Mexican gaming sector
had grown by 110 percent. Since then, gaming has
continued to expand at a fast rate in Mexico, with
an estimated 7,000 slot machines nationwide and
around 300 slot parlors, many of which are large
scale.
Furthermore, although slot parlors and bingo
halls are not permitted to house table games, slot
parlors in Mexico are attaining an increasingly
casino-like feel. This is largely due to the fact
that SEGOB gave Class III slot machines the
green light in August 2010. Previously, only Class
II electronic-based bingo slot machines were
allowed in Mexico and numbers, not symbols,
were drawn electronically.
For some years a number of attempts have
been made to repeal the old act. The push for
new gaming legislation has traditionally been
motivated by a desire to improve the tourism
industry as it was believed that Mexico could offer
Las Vegas-style gaming in five-star hotels located
in tourist hotspots. Now the impetus comes out
of concern over the fast expansion of gaming
nationwide, and controversy gathering around
SEGOB’s issuing of licenses. Lawmakers also have
been keen to put an end to the so-called umbrella
licenses whereby operators have been able to
operate a number of slot parlors and sports betting
shops under a single license.
More calls for reform came closely on the heels
of the tragedy in Monterrey in 2011 when a
group of armed men attacked, and then set fire
to, the Casino Royale, located in an upmarket
neighbourhood of the city of Monterrey, leaving
52 people dead.
In February 2013 a congressional committee was
charged with investigating how licences had been
granted throughout the nation. The committee,
made up of 11 deputies, was charged with looking
into how licenses had been granted by the
Interior Ministry (SEGOB) after growing reports of
corruption and allegations that former members
of SEGOB had trafficked licenses. The committee
was also charged with drafting a new law which
would regulate the gaming industry, safeguard the
rights of players and make the licensing process
more transparent.
Crucially, the new gaming act as it was developed
in the committee found universal consensus
from across all parties in the Lower House and
was developed closely with industry experts,
including the Mexican Gaming Association
(AIEJA). In addition while the committee looked
into the issue, the Interior Ministry closed a
number of establishments in the states of Nuevo
Leon, Coahuila and Chiapas, with the government
suspending around 50 casino licenses in 2014.
The House of Representatives finally approved the
new Federal Betting and Raffles Law in December
2015. Under present proposals, operators currently
operating a license under the terms of the old
1947 Raffles and Gambling Act will be allowed to
operate until their licenses expire but will then
have to reapply for a new license and meet the
requirements stated by the new act.
Each casino or gaming establishment will be
issued a single license per gaming establishment.
Licenses will be valid for 10, 12 or 15 years and will
be renewable only once for the same period. The
minimum entry age will be raised from 18 to 21.
Anti-money-laundering measures will include
provisions requiring that all bets made must be
registered electronically and that operators must
also report any suspicious activities to the newly
appointed gaming board. Slot parlours and sports
betting shops will no longer be able to rely on stays
of closure and protection from local courts if they
are found to be in contravention of their licenses.
The new bill also creates a new gaming control
board. Speculation had been growing, especially
since the tragedy in Monterrey, that a new gaming
board would be made up from members from a
number of government departments and that it
would no longer be in the hands of the Interior
Ministry.
However, SEGOB will remain firmly at the helm,
and it will be the head of the Interior Ministry who
will appoint the head of a newly created gaming
board called the National Institute of Gaming and
Raffles (Instituto Nacional de Juegos y Sorteos).
Meanwhile, the Interior Ministry will also retain
control over the opening and closing of all casinos
and other gaming establishments, including sports
betting centres and race tracks.
The new act also gives operators already active in
the marketplace the opportunity to expand their
businesses for two years as it gives operators
permission to make use of any licenses they
have not yet made use of for that period. At
present there are a total of 340 casinos, which
are registered with SEGOB. However, if operators
decide to expand their operations and make use of
all of the licenses currently granted to them, then
this could more than double to 800.
The law was passed onto the Senate where it
quickly became stalled in the committee stage.
Meanwhile opposition to the new act has been
growing and a number of hotel and tourist
associations have joined forces to criticise current
proposals which would allow for full scale
casinos in Mexico. Opponents argue that the new
gaming act would leave Mexico vulnerable to
corruption, money laundering, and would lead to
an inevitable increase in organised crime.
A number of organisations including the National
Chamber of Tourist Commerce (Concanaco
Servytur) as well as some hotel associations have
questioned the business interests behind the new
act and asked if Mexico was ready for new casinos
17
if they are authorised.
Gaming legislation has now been delayed for
over a year but has been earmarked as a matter
of priority for the latest legislative session in the
Mexican Congress which began on February
1st. Earlier this year the Head of Mexico’s
Interior Ministry Miguel Ángel Osorio Chong
urged senators from the ruling Institutional
Revolutionary Party (PRI) and their close allies
from The Ecological Green Party (PVEM) to pass
Mexico’s new gaming law quickly. Speaking at
the opening of Eighth Plenary Meeting of the PRI
and PVEM parties the official said that the country
was in need of a new law which would more
accurately reflect the reality of gaming in Mexico
and which would grant the government tighter
control over the industry.
Meanwhile Mexico’s Supreme Court of Justice
in January endorsed the use of slot machines
in casinos. In its ruling the court declared that
those playing slot machines are taking part in
sweepstakes and the outcome does not depend
on skill unlike card games which are defined as
gambling in Mexican gaming law.
In so doing the Supreme Court ended a long
running legal battle which began in 2013 when
President Enrique Peña Nieto enacted a number
of amendments to Mexico’s gaming laws by
Presidential decree. The chamber of Deputies
challenged the decree before the Supreme Court,
arguing that the executive and the Interior
Ministry had encroached upon powers reserved
for the Congressional branch.
The decree stated that operators may no longer
assign the rights to operate gaming establishments
to third parties. It also set a 25 year limit for
gaming licences and granted the Directorate
General of Gaming within the Interior Ministry,
wider powers when it comes to end the licences
of those operators found to be operating illegally.
The law also allowed for the continuation of slot
machines in casinos.
slot machines outside of casinos such as in small
businesses and shops will remain illegal.
HORSE RACING AND OFF TRACK BETTING
Horse racing in Mexico is small scale. Compañía
Interamericana de Entretenimiento (CIE) runs the
only large scale horse racetrack in Mexico: the
Hipódromo de las Americas race track in Mexico
City. Over 1500 races are staged at the track each
year. Attendance at the track is increasing slightly
but the vast majority of wagering on horse racing
is still made on simulcast races from the United
States screened at a growing number of sports
betting shops.
SPORTS BETTING
Mexico has permitted sports betting since 2005.
Since then sports betting has spread quickly
and sports betting shops are often part of much
larger gaming establishments. Leading operators
Compañía Interamericana de Entretenimiento
(CIE) and Caliente run a number of racing tracks
in Mexico and sports betting shops. Both have
signed agreements with Spanish company Codere.
Codere provides gaming management services
and hall development services to Caliente and in
1999 CODERE signed a joint venture agreement
with CIE where Codere would develop and run its
bingo halls and sports betting shops.
BINGO
In Mexico bingo halls, almost without exception,
contain slot machines and like sports books
they are usually part of a larger gaming centres.
The three largest gaming operators in Mexico
Caliente, CIE (Compañía Interamericana de
Entretenimiento) and Televisa all run bingo halls
as part of their betting establishments.
In its ruling in January the Supreme Court
unanimously upheld five articles of the 2013
regulation arguing that they did not go beyond
the terms of the original Gaming and Lotteries Act
and were therefore legal. Crucially, the Court also
declared that slot machines are considered a form
of sweepstakes of numbers or symbols which are
permitted by Article 2 of Mexico’s gaming law as
they do not involve the use of skill on behalf of the
players which is prohibited in Article 1.
ONLINE
According to current law online gaming is only
permitted via special license to land based
operators located in Mexico. Despite this
Mexicans bet via offshore betting sites in great
numbers. According to AIEJA (The Mexican
Operators and Providers for the Entertainment
and Gaming Industry) the online gaming market
in Mexico is now in fourth place behind Japan,
Europe and the United States. Mexicans gamble
an estimated US$300m a year via offshore sites
making it the fastest-growing online gaming
market in Latin America. This is helped by the
fact that there are no restrictions in place when it
comes to advertising. As long as advertisements
include minor protection and responsible gaming
disclaimers online gambling companies can
advertise freely in the Mexican media.
The court also confirmed that the Directorate
General of Gaming within SEGOB is the body
which has the right to authorise the establishment
of businesses which carry out sweepstakes.
However, the court’s decision will only benefit
operators of slot machines located in casinos as
Due to the rise in gambling via off shore sites,
in November 2012, Mexico’s Interior Ministry,
announced that it would be working closely
with two of the most powerful Mexican gaming
associations, as well as the Association of Mexican
Banks, to identify, control and supervise sites
18
targeting the Mexican market from offshore.
The agreement was, it was believed at the time,
designed to pave the way for new government
policy, which would have restricted the activities
of offshore operators in the Mexican market. This
would have included the blocking of banking
transactions with offshore operators. Mexico’s
Interior Ministry would also keep a database of
unlicensed offshore operators that continued to
target the market. However, the initiative was
never passed.
Mexico’s new gaming bill does not address the
online space to a significant degree. Nor does it
offer an in depth analysis on how online gaming
should be regulated in the future in Mexico.
The new law states that online gaming has been
the subject of serious analysis in the European
Union, and points to a number of studies carried
out in Europe which highlight the urgent need for
Mexico to address the issue. The law then goes
onto highlight the dangers associated with online
gaming which have already been pointed out in
other government sponsored reports. The law also
highlights a number of factors that can foster the
development of gambling addiction and other
negative consequences of online gaming.
The new law proposes that Mexico should adopt
strict player protection measures as adopted by
other jurisdictions in Europe specifically in line
with France and the U.K. such as verification of
the identity, age and address of the user through
existing third-party systems. Strict control of
advertising would also be put in place along with
systems which would apply automated controls
on betting and gaming activity, including full self
exclusion. Furthermore the web site established
by the licensee must be defined with domain
name com.mx.
However the bill’s primary focus is the land based
sector and the online section of the bill takes up
less than a page. It merely provides suggestions on
how online gaming should be regulated into the
future. As a result it is likely that the government
will address the more pressing issue of the land
based market first before addressing online
gaming.
Meanwhile a number of foreign operators have
signed agreements with licensed land based
operators in Mexico who have been granted
permission to offer online games by the Interior
Ministry.
The most recent is Ladbrokes which in 2015
announced that it would operate in the Mexican
market through Sportium, a joint venture with
Spanish operator Cirsa. Ladbrokes was permitted
to launch a new regulated website in Mexico due
to Casino Life, Cirsa’s Mexico land based casino
business, which was authorised by SEGOB. The new
website (www.casinolife.com.mx) offers sports
betting and casino products, bingo and over 200 slot
games. SportiumBet is the sports betting service on
the site and carries a broad range of betting markets
with particular focus given to football, basketball,
baseball and American football.
Another firm to gain a foothold in the online
market via an agreement with a local operators is
Jackpot digital. In 2011 Las Vegas From Home.com
Entertainment Inc. (Now Jackpot Digital) signed an
agreement to acquire a 99 per cent equity interest
in Poker from Home de Mexico, a private company
licensed by SEGOB to operate online bets and online
casino gaming activities in Mexico. The Federal
Mexican Gaming Permit was originally issued by
SEGOB and is valid until May 24, 2030.
LOTTERIES
In Mexico there are two state owned lottery
organisations: La Pronósticos para la Asistencia
Pública, and La Lotería para la Asistencia Pública.
While lotteries have traditionally been run by
the central government the first state lottery was
granted to the state of Baja California in 2015. It
looks likely that other states will soon follow suit
and could also begin to operate their own state
lotteries. This could lead to a rapid expansion of
the market in the near future.
The Lotería para la Asistencia Pública (The Lottery
for Public Assistance) offers traditional draws and
instants and has since 2005 run sales points via
HSBC ATM machines. Today the lottery allows
players to buy tickets via the internet and mobile
phone.
The other state lottery, Pronósticos para
la Asistencia Pública (Forecasts for Public
Assistance) went into operation in 1978 and
initially let Mexicans make a bets on the outcome
of the World Cup in Argentina. Soon afterwards
it launched the weekly Progol product - a
football betting game. Since then the lottery has
considerably increased the number of products on
offer. In 2006 Pronósticos was permitted to run
lotteries as well as sports betting games and now
runs instant tickets, Lotos, numbers games and
lotteries.
Today it is the main online lottery operator in
Mexico. GTECH (now IGT) has been working
with Pronósticos since 1987 and in 2015 signed
a six-year deal to provide lottery products in
conjunction with Pronósticos para la Asistencia
Pública. The deal will see GTECH provide a
number of instant ticket and draw-based games
through the country. The deal will see GTECH
supply the Mexican lottery with at least 11,000
draw-based lottery terminals that will replace
previous machines used by Pronósticos. GTECH
will also be tasked with upgrading the company’s
communications network and providing ongoing
services both online and at retail locations,
including the development of new retail channels,
maintaining its online terminals, and helping
develop their customer service operations.
The private lottery in Mexico is operated by
Apuestas Internacionales, a subsidiary of Televisa.
Televisa, is also the owner of several casinos
operating under the PlayCity brand across the
country. Televisa is the largest media company
in the Spanish-speaking world. Sorteos del
Trébol its lottery and raffle brand is dedicated to
commercializing number and instant raffles. It
has over 5,300 points of sale in Mexico. As well
as offering traditional raffles such as Superlotto it
also runs sports pools games such as Gana Gol.
NICARAGUA
CASINOS AND SLOT MACHINES
In 2001 Nicaragua passed a wide sweeping gaming
law, which placed slot parlours and casinos under
the control of the Ministry of Tourism. Casinos
would, it was hoped, be a further boost to the
tourism industry and would be permitted in night
clubs and hotels only. The minimum investment
varied depending where the casino was located
with a minimum investment of US$250,000 in
capital Managua and US$100,000 elsewhere.
However, the law made very little impact as
illegal gaming nationwide continued to thrive and
went generally speaking unchecked. As a result
the gaming law of 2001 went up for debate once
again in 2006.
The new law, as it was debated in the National
Assembly, sought to allow casinos but only
if they were part of a five star hotel. To begin
with the law appeared to have the backing of
the majority of the deputies especially after a
special investigative committee was charged with
investigating the issue and it did appear for a time
that Nicaragua would soon pass its second major
gaming law. Unfortunately, due to a backlog of
more pressing issues the law became stalled.
However, while gaming legislation languished
in the National Assembly, casinos and slot
machines came under special attention from the
tax collection agency. In order to pay back some
of the money owed to the International Monetary
Fund (IMF) in 2005 the government looked to
casinos to raise part of the necessary tax income.
Initially, it looked like casinos would have to pay
an additional US$30 a slot and US$300 a table per
month.
In March 2006 this was in principle approved but
with some changes. A fixed tax was set at US$200
per table as opposed to US$300. The tax on slots
varied depending on the size of the casino between
US$18 for the smaller casinos to US$25 to the largest
(those with more than 601 slots). The new emergency
tax meant that taxation on casinos increased by
more than 123 per cent over the next six months.
In 2009 the issue of gaming was discussed once
again in the House of Deputies and deputies
began to consider a new law which would
permit casinos to operate in three to five star
hotels with a minimum of thirty rooms. A new
gaming law was finally passed a year later and
went into effect in December 2011. The new act
divided gaming establishment into four separate
categories and heralded the beginning of a
crackdown on illegal gambling especially on slot
machines found to be operating outside gaming
establishments.
From December 2011 onwards, gaming
establishments in Nicaragua have been divided
into four categories while slot machine parlors
have been categorised according to the number of
slots on the premises. Category A establishments
house a minimum of 71 slot machines and a
minimum of three gaming tables; Category B
are slot parlours with 25 to 70 slot machines;
Category C may have from 16 to 24 slot machines
on the premises while Category D establishments
may house a minimum of 10 and a maximum of
15 slot machines. Each category also requires a
minimum investment ranging from US$10,000 to
US$50,000.
It was estimated that the new act would increase
government revenue made from the sector from
US$1.7m to US$46m a year. However illegal
gaming continued to thrive as did tax avoidance.
In 2014, in a move which took many observers by
surprise, the Nicaraguan government announced
that it would take the industry out of the control
of the Ministry of Tourism and put gaming under
the control of the Ministry of Finance and the
Financial Analysis Unit – the local tax collection
agency.
The executive branch in its preamble to the
new initiative, explained that the transfer was
necessary due to the fast rise of gaming in the
country. Describing the gaming industry as an
increasingly lucrative business, change was
necessary and, “the most appropriate institution
to regulate this activity is the Ministry of Finance.”
These reforms were passed after MPs
unanimously approved the amendments to the
Special Law for the Control and Regulation of
Casinos and Gaming Rooms. The amendments
created a new “Casino Control Council” which
together with the Ministry of Finance is now
responsible for regulating all matters related to
gaming. The new Council meets at least once
every three months, to develop strategy and
monitor compliance. Meanwhile, the Treasury
is now responsible for enforcement by granting,
modifying and cancelling licenses.
In addition, the amendment to the act creates
an office of casinos and gambling halls, which
is responsible for controlling the importation
19
and manufacture of all gaming equipment. An
increasing number of government inspectors
will also be empowered to close temporarily or
permanently any establishments found to be
operating outside the terms of their licences.
Inspectors will have much wider powers when
it comes to inspecting premises and will work
alongside local police forces to ensure that
operators are paying the correct tax while
ensuring that slot machines pay back at least 85
per cent of the stake back to the player.
However, concern is still growing around illegal
gambling which continues to rise in small
businesses. There are still an estimated 11 thousand
to 13 thousand unauthorised slot machines located
in pharmacies, markets, shops and bars in the
country.
OTHER SECTORS
Other sectors of the gaming market are
underdeveloped. Bingo is permitted under
Nicaragua’s gaming laws but there are only a
small handful of bingo halls. There are no horse
race betting tracks in Nicaragua. While sports
betting is permitted under local law it is limited
to sports betting facilities based at Pharaoh’s
Casinos. Pharaoh casinos are owned by market
leader Thunderbird which operates five Pharaoh
casinos in Nicaragua. Meanwhile online gaming is
yet to be regulated.
LOTTERIES
In Nicaragua there is a state run national lottery
called the Lotería Nacional de Nicaragua which
has been in operation since 1995. Loto is also
popular and began operations in Nicaragua in
2011 after an agreement was reached between the
Lotería Nacional de Nicaragua and the Canadian
Bank Note Company. The Canadian Bank Note
Company provides electronic lottery systems to
the Loto in Nicaragua and there are now four Loto
products available in more than 700 LOTO outlets
located in 31 cities across the country.
PANAMA
CASINOS AND SLOT MACHINES
Before 1998 there were only a small handful of
casinos in Panama all of which were state run.
In 1998 the government passed a wide sweeping
gaming law, which permitted casinos as long as
they were part of five star hotels with a minimum
of 300 rooms. Since then the casino industry in
Panama has grown rapidly and is now home to
one of the most developed gaming industries in
the region. This boom coincided with Panama’s
growing tourist industry and subsequent building
boom - the largest of its kind in the history of
Latin America.
The key guiding principles behind the gaming act
was that casinos should attract tourists. But it has
been largely Panamanians who have fuelled the
revenues in casinos. By 2005 it was estimated
20
that 85 per cent of all those who visited casinos
in Panama were locals leading to calls to restrict
the number of licences, increase taxes and bar
entry to low income bracket Panamanians. This
has been made more acute by the rapid expansion
of slot parlours, which are also becoming
increasingly popular amongst Panamanians.
Consequently casinos and slot parlours have been
repeatedly singled out for increased taxation and
fees.
At the beginning of 2012 Panama’s National
Assembly initially proposed to increase the
taxation rate of 19 per cent of gross income
generated on slot machines to 22 per cent.
However, in the third reading of the act the tax
on slot machines was actually reduced from 19
per cent to 18 per cent while the tax rate on table
games was set at 12 per cent of monthly gross
income. In May the new act was signed into law
by President Ricardo Martinelli and the new taxes
went into effect in January 2014.
The rise of slot parlours in poorer areas has
become an increasing cause for concern with
lawmakers admitting that urgent measures are
necessary to tackle the issue. The Gaming control
Board (JCJ) has stated that it considers Type C
machines, to be the main causes of pathological
gambling, since they are located in nearby low
income neighbourhoods and in rural areas. Type
C slot machines may only pay a maximum of
US$200 per machine in prizes.
In addition according to local press reports, the
state is currently unaware of the exact amounts
which are bet via Type C slot machines located in
slot parlours. This is because, unlike slot machines
located in casinos and categorised as type A in
Panamanian gaming law, slot machines located
outside of casinos are not connected to a central
government controlled server. However Secretary
of the Gaming Control Board (SJC) Eric Ríos told
press last year that the government was working
on a project to connect type C machines slot
machines online. Mr Ríos said that the board was
currently in the analysis stage and that the system
could be operational this year.
Despite the fact that the economy’s growth rate
has decreased by around six per cent over the
last two years the industry has until recently
continued to grow. However the industry was hit
by a new tax in May 2015 which applied a tax on
cash withdrawals from casinos of 5.5 per cent.
The previous law stated that seven per cent was
payable on payouts of US$300 or more via slot
machines. However the 5.5 per cent tax applies now
to all cash withdrawals made in casinos, including
tips to employees, who have already expressed their
complaints on the grounds that tips form part of their
salary. Complicating the matter further is the fact
that tax deductions are made even if the customer
cashes in chips without winning.
The new tax has been blamed for falling
revenues and job losses. In November 2015 it
was announced that revenues were down for
the gaming industry with operators putting the
blame squarely on the new tax. Between July
and August that year gaming revenue fell by 9.1
per cent after experiencing an increase since the
beginning of the year of 5 per cent. In January
this year according to a report released by the
Gaming Control Board gaming revenue in Panama
decreased by as much as 14.4 per cent. The
decreased revenues mark the end of a decade of
increased revenues for gaming companies
In March this year it was revealed that falling
visitor numbers and the new tax had also led to
layoffs. Since June 2015 a total of 1,200 workers
have lost their jobs, 900 of these layoffs occurred
after December 2015 while during the first two
months of this year alone 300 people were made
jobless. However, the government has defended
its decision to raise taxes in order to combat
gambling addiction and raise US$60m of the
US$74.8m needed to increase pensions.
HORSE RACING AND OFF TRACK BETTING
Race wagering is contracted to private companies
by the gaming board and is heavily taxed by
the government. Horse racing has been on
offer in Panama since the 19th century. Horse
racing reached its peak in the 60’s and 70’s
but slowly lost popularity in the following two
decades. However the sport saw the beginning
of a resurgence when the President Remon
Racetrack track (which first opened in 1956) was
privatised and in October 2005 Spanish company
Codere won the contract to become the new
concessionaire of the track under its subsidiary
company Hipica de Panama SA.
Codere now has a contract for 20 years to
operate the track. At the end of 2006 Codere
also purchased Crown Casinos and the following
year opened up the Racino Crown Casino at the
track. Codere invested around US$13m into the
racetrack which included the re-modelling of the
track. Codere also operates horse race betting off
track, at its six Turff Bet and Sport Bars
SPORTS BETTING
Sports betting is also allowed in Panama. Codere
Group controls 81 betting shops, making it the
largest bookmaking franchise in the country.
Sport books can be located at betting shops, at the
racetrack or in casinos and bets can be placed on
most sporting events.
BINGO
Bingo is permitted under Panama’s gaming laws.
However the activity is in sharp decline. Activity
in bingo halls continued its downward trend in
2015 after falling 85.7 per cent and totalling just
U.S2.4m. This compared to 2014 when revenue
grew by 558 per cent and stood at over US$17m.
ONLINE
Panama’s Online Gaming Act came into law on
12 November 2002. One of the largest consultancy
firms operating out of Panama today is
International Cybergaming Corp which was given
full authority by the Panamanian government to
designate others to operate under their license
and supervise Internet gaming enterprises. This
means that every online operator in Panama
is sub-licensed by Cybergaming Corp and only
they can issue online licences to third parties. In
addition Cybergaming is responsible for collecting
the fees, monitoring game payouts, recording
all transactions and making them available for
inspections and compiling with regulations. They
must also ensure that there is compliance with
international money laundering regulations.
A licence fee to operate online gaming costs
US$40,000. There is also an annual licence fee of
US$20,000.
However as Panamanians are not allowed to bet
through online casinos operating in Panama, the
income constitutes “income from foreign source,”
therefore except for payments corresponding
to the Gambling Control Board, online gaming
companies in Panama are not be subject to
payment of income tax, tax on dividends and
profit participation.
LOTTERIES
Lotteries have existed in Panama since 1872
when the first lottery was established to benefit
the education system. The Loteria Nacional de
Beneficencia (The National Charity Lottery) was
founded in 1914 and the profits were initially
used to cover the cost of the maintenance of the
public hospitals in Panama. Today proceeds are
destined for government sponsored social welfare
programmes.
Currently, the National Lottery of Panama
operates traditional draw-based lottery games
through a network of 13,500 lottery vendors.
Draws are held on Wednesdays and Sundays
at 1pm. In 2013 Scientific Games signed a 10
year contract with the Loteria Nacional to
supply instant tickets under a cooperative
services programme. It was the first time that
instants were available in Panama. In 2014
Scientific Games announced that it had signed
an amendment to its contract to provide the
country’s first online lottery game, Pega 3, under
the company’s existing agreement.
PARAGUAY
CASINOS AND SLOT MACHINES
Casinos have been permitted in Paraguay since
1997 and under current rules may be located in
provinces with more than quarter of a million
inhabitants with only one casino being permitted
in capital Asunción. The 1997 act also created a
gaming commission called El Comisión Nacional
de Juegos de Azar (CONAJZAR). Although casinos
have been permitted now for almost fifteen years
the casino industry remains underdeveloped with
little foreign investment in the industry and illegal
gaming has remained rampant.
Furthermore, the licensing process has been
fraught with difficulties with three tender
processes being abandoned. In 2009 and again
in 2010 and 2011 CONAJZAR was forced to
halt the bidding process over accusations of
irregularities and other issues mostly revolving
around the fact that bidders were not meeting
the minimum requirements set out to by the
gaming control board. However, after the failure
of the last bidding process the head of the board
along with the Ministry of Tourism began to
seek out a much larger investment in the sector.
In 2012 CONAJZAR announced that the bidding
process would be open once more with the goal of
permitting ten large-scale casinos throughout the
country. The aim of the new bidding process was
to attract large scale foreign investment which
would include other amenities such as five star
hotels in order to build tourist infrastructure in the
region.
However that too was unsuccessful and a new
bidding process is now underway. In 2015
CONAJZAR announced plans to discuss the
bidding process for casinos in three departments
in Paraguay. According to CONAJZAR President
Javier Balbuena, the successful applicant will
be required to invest in hotel infrastructure and
the board will impose a minimum amount when
it comes to the investment. While a number of
further specifications will be published before the
tender process is launched, the exact details of
the process will not be announced until the board
adopts further regulations governing the process.
Once these are agreed upon, the process will begin
with licences being awarded for casinos in the
Central department as well as the departments
of Alto Parana and Amambay. In July 2015 the
gaming board also announced that the bidding
process would also include two tender processes
for two casinos in the capital.
In July 2015 it was also announced that Paraguay’s
Minister of Tourism Marcela Bacigalupo and
Javier Balbuena had signed an interagency
cooperation agreement that aims to coordinate
action, knowledge, criteria and efforts to promote
the development of tourism based around gaming.
Through control mechanisms implemented
to comply with current legal regulations the
agreement means that the boards may promote
the development of events aimed at promoting
tourism and entertainment through gambling.
While the market it set to expand in the future
gaming tax revenue is on the rise thanks to tougher
measures and new online controls. Tax revenue
generated by the gaming industry in 2015 was up
by over 7.6 per cent compared to 2014, according to
figures released by CONAJZAR and stood at U$S18m
at the end of 2015 – the highest for five years. Of this
amount 30 per cent was allocated to the Department
of Social Welfare and Assistance, 30 per cent to
the departmental governments, 30 per cent to the
municipal governments and the remaining 10 per
cent was generated for the treasury.
Gaming tax revenue is likely to rise significantly
long term with the licensing process for the
construction of a Hard Rock Hotel and Casino in
the city of Ciudad del Este now underway. Hard
Rock International first announced plans to install
a casino and hotel in the city of Ciudad del Este in
2014. The hotel will, it is believed, have 250 rooms
while the casino will house 500 slot machines and
30 gaming tables.
The decision to launch in Paraguay was made
after a wide sweeping study was carried out by a
team of local specialists who provided advice on
marketing, strategy as well as financial planning,
government oversight and local gaming law.
There has, however, been some controversy
regarding the planned location of the casino and
hotel. Last November it was announced that the
casino would be located on land belonging to
the headquarters of Paraguay’s National Ports
Authority (ANNP) which has become increasingly
abandoned. However trade unionists have asked
a judge to block the move arguing that there is a
ban in place which prohibits further development
in the area.
HORSE RACING AND OFF TRACK BETTING
In Paraguay horse racing accounts for less than 1
per cent of the gaming industry as a whole. Apart
from the largest racetrack which is located in the
capital of Asuncion and is run by the Jockey Club
del Paraguay horse racing is still small scale and
restricted to small localised racetracks. In addition
there is no off track betting offer.
SPORTS BETTING
Land based sports betting is currently limited
to a single location attached to the racetrack
in Asuncion and there is no other bricks and
mortar sports betting option. In 2015 CONAJZAR
announced that a sport betting tender would also
be launched in the near future as the board opens
up the market further. However the board has not
revealed any details of how sports betting will be
regulated in the future and under what terms.
BINGO
Bingo has been permitted for over twenty years
in Paraguay but it has been steadily declining in
popularity. Only bingo on television is popular.
ONLINE
Online Gaming is not covered in the gaming act
of 1997 but in 2008 CONAJZAR announced that
it aimed to put draft legislation in front of the
21
Chamber of Deputies before the end of 2009
that would allow for online casinos. However,
no progress was made on the issue. There are,
however, moves afoot once again to allow for
online gaming as the board seeks to widen the
variety of games on offer and expand the market.
In January 2015 Javier Balbuena told press that
Paraguay was close to regulating online gambling
with proposals on the table which could be
approved before the end of the year. While no
regulation has been out forward since then it is
likely that the board will address the issue in the
near future as part of the board’s current plans to
open up and expand the market.
LOTTERIES
Before 2010 the lottery sector in Paraguay was in
decline and lotteries were run by Repsur owned
by local businessman Eduardo Hrisuk. Repsur’s
licence to run lotteries ended at the end of 2009.
The lottery sector has slowly showed signs of
improvement although Quinela remains by far the
most popular lottery product. Meanwhile lotteries
are becoming more established in the capital. This
was after CONAJZAR awarded newly established
company Entretenimientos Generales, the right to
operate lottery games in Asunción in 2013. GTECH
supplies lottery technology and support services
for the company under a five year agreement
signed in the same year. It also provides system
implementation consultation and training as well
as marketing support to ensure the expectations
of the Paraguayan government are realised
throughout the term of the concession contract.
The most popular lottery type game in Paraguay
is Quiniela which in sales far supersedes slot
machines, casinos and sports betting combined.
CONAJZAR initially awarded local company
Mepshow the right to run Quiniela in return
for a monthly fee of US$1.5m and 2 per cent of
net gaming revenue per month. This was after
the rights to run Quiniela were offered to other
companies in Paraguay in a public tender process.
However while the licence officially ended in
2015 the company continued to run Quinela
until May as the handover of Quinela took place
to the winning bidders Paraguay Technology
Development (TDP) which was awarded the
licence to run the game for the next five years.
Taxation over the game was changed from a fixed
fee to a one per cent tax on revenues as the game
was transferred to the new company. This has had
a dramatic effect on gaming tax revenue for the
state. In October 2015 Javier Balbuena announced
that the fixed rate on quinela alone had already
increased gaming revenues for the state by as
much as 25 per cent
22
PERU
CASINOS AND SLOT MACHINES
In 1994 slot machine parlors and casinos were
finally permitted in Peru. Before then, slot
machines were only permitted in cinemas, but due
to the new gaming act of 1994, the number of slot
machines increased exponentially nationwide and
almost overnight. Unfortunately, the vast majority
of slot parlors did not come under any government
control. Ten years after the act was passed, there
was an estimated total of 63,000 slot machines
in Peru, of which only 5 percent were registered
with the government. At the same time, only 57
slot machine parlours were registered nationwide,
while almost 800 slot parlors still operated under
judicial stays of closure.
By 2007, the outlook for the gaming industry was
very bleak indeed. By the end of 2006, only 3,000
slot machines were officially registered with the
Peruvian government and a further 59,000 slot
machines were operating nationwide without
a license. Illegal gaming had reached almost
epidemic proportions.
In the face of gaming going unchecked, the
Peruvian government was forced to take drastic
measures and the clampdown really began in
earnest in 2004. The government gave casinos
and slot machine parlour owners a year to get
their house in order: pay tax, register their slot
machines and provide evidence that they were
operating fairly. But the new legislation was,
in most cases, simply ignored. And when the
government did intervene to try and shut down
a slot parlour, invariably the operator appealed
to the courts and received an extension of their
license.
However, in 2005, the government began a
series of high-profile raids. In August, around
500 slot machines, which were found to be
operating illegally in off licenses, near schools
and in supermarkets, were confiscated and then
destroyed. Confiscations and raids continued
apace in 2006.
In that year, a court ruling allowing for slot parlors
and casinos to remain open finally became void,
and in December the Peruvian government passed
the “Reordering and Formalization of Casino and
Slot Machines Law.” The law not only created
a gaming control board with wide-sweeping
powers, but also declared that court order granting
stays of closure, under habeas corpus rulings were
invalid.
The new law also ruled that from January 1, 2007
onward, slot machine parlours and casinos had to
register their operations with the Department of
Foreign Trade and Tourism (MINCETUR) or face
immediate closure. Over the following months,
MINCETUR received over 600 applications from
slot parlour and casino operators for permission
to formalise their businesses and register with the
government.
As a result of increasing government control, the
gaming sector is almost unrecognisable compared
to how it was before 2007, and the Peruvian
government has begun to reap the tax benefits
of a more closely regulated industry. At the same
time, gaming professionals have welcomed the
government clampdown on illegal gaming and
have been keen supporters of the new measures
to further regulate the sector.
Today, 30 percent of all tax income generated by
gaming goes to the local municipalities where the
slot parlour or casino is based. Thirty percent goes
to the province or state. Fifteen percent goes to
sports funding programs. Fifteen percent goes to
the public treasury, and the remaining 15 percent
is destined for the coffers of the Department of
Foreign Trade and Tourism.
In addition gambling equipment in Peru is now
monitored online and in real time by a central
government-controlled server. Operators had
until July 2012 to comply with the new online
regulations. According to MINCETUR thanks to
the new system tax revenue steadily began to
increase and the government continues to put
stricter rules in place when it comes to monitoring
the industry.
In April this year the regulatory and supervisory
authority in Peru over banking and financial
institutions the Superintendence of Banking,
Insurance and Private Pension Funds (SBS)
approved a raft of new measures designed to
counter money laundering and terrorist financing
in casinos and slot parlours. The new measures
have the approval of the Financial Intelligence
Unit of Peru (FIU) as well as MINCETUR and
applies to those who run casino games and slot
machines authorised by MINCETUR through the
Directorate General of Casino Games and Slot
Machines. The new money laundering prevention
system must be overseen by a compliance
officer who will monitor the full and proper
implementation and operation of the new rules.
The rules are applicable for those operators
who run five hundred or more slot machines in
total, as well as those operators whose gaming
establishments are located in the regions of Tacna,
Puno, Ucayali, Loreto, Tumbes and Madre de
Dios. Under new rules operators must implement
a money laundering prevention system by
managing the risks to which they are exposed
and the new proposals state that operators will be
required to maintain a record of all those clients
who make bets of US$2,500 or over as well as the
winners of high payouts. In addition operators
must carry out due diligence on all staff, confirm
the identity of their clients and maintain records
for five years. Any suspicious financial transaction
regardless of the amounts involved, must be
entered in a register of suspicious transactions and
must also be reported to the Financial Intelligence
Unit in a period not exceeding 15 working days.
The new rules will go into effect on June 1 2016.
The increasingly regulated landscape has meant
that Peru has seen a number of investments of
late with more on the way. In March this year it
was announced that Chilean gaming company
Dreams recorded a net profit of $10.4bn (Chilean
pesos) an increase of 15 per cent compared to last
year due in part to the launch of new casinos in
Peru. Dreams operates six casinos in Chile and it
has recently expanded into Peru where it operates
four smaller gaming establishments in Lima and
has plans to expand further in the region.
In addition in February 2015 Dreams and Sun
International announced that they had entered
into a memorandum of understanding to merge
their Latin American operations as part of Sun’s
International plans to expand into the Latin
American gaming market. Peru is seen as a key
market for the newly merged company.
HORSE RACING AND OFF TRACK BETTING
Horse racing has a long history in Peru but
attendance is now in decline. There are two
racetracks in Peru. The Hipodromo de Porongoche
is located in the city of Arequipa in the far south
of the country and the other larger track, the
Hipódromo de Monterrico, is located in capital,
Lima. Horse racing though is still quite popular
off track and there are 101 off track betting shops
nationwide known as “telepódromos.” In addition
Monterrico Televisión, a cable television station,
broadcasts races live from the track in the capital.
SPORTS BETTING
Intralot launched sports betting game Te Apuesto
in 2011. The game is offered in selected points of
sale of Intralot de Peru’s retail network, covering
the whole Peruvian territory. It also allows
customers to bet online via its sport betting portal
Te Apuesto.com. However bricks and mortar
sports betting is extremely limited and sports
betting for now is limited to sports betting pools
via Te Apuesto point of sales along with a number
of independent bookmakers located mainly in
capital Lima.
BINGO
Bingo halls come under the same law that was
passed at the end of 2006 that regulates casinos
and slot machine parlours. There are only a very
small number of bingo parlours and bingo is
becoming increasingly less popular.
ONLINE
Peru was one of the first jurisdictions to adopt
online gaming in the region. The board has issued
a small number of licences to online operators. In
2008, Betsson launched its first online gambling
site in Peru. The site offers poker, virtual instants,
poker and sports betting, including betting on local
football matches.
Since 2008 Intralot Peru has also allowed players
to take part in a number of lottery games via the
internet, and there are a number of online licensed
platform which offer a large variety of bets.
Although growth in the sector has been slow, it is
believed that gambling via these platforms will
gradually become more popular.
The most recent online operator to offer its
products in Peru is Offsidegaming. In 2012,
Offsidegaming launched Inkabet.pe, the first local
online operator in the Peruvian market. The site
offers sports betting, casino and slots games, and
is the first online casino that caters specifically to
the Peruvian market. The site also now offers a
live casino option.
There have been a growing number of reports
that Peru could soon address the issue of online
gaming and open up the market further. In June
2015 Director General of the Peruvian Gaming
Control Board Manuel San Román Benavente
announced that Peru could soon give online
gaming the green light and that the gaming
control board is working on a draft legislation
which would permit an expansion of the market
to offshore operators. According to local press
reports, the tax for online gambling operators
would stand between fifteen to and twenty per
cent. This will be significantly higher than land
based operators which currently pay 12 per cent.
The reason for the difference, according to Mr.
Benavente, is that casinos help create jobs locally
and they also have a number of “video systems
and a number of controls in place.” Although the
exact details of the new bill are unknown it is
believed that any operators offering their services
locally will have to have a domain name ending
in .pe but servers will not necessarily have to be
locally based. However, the board will implement
a system whereby it will be able to be monitor
online transactions locally and in real time.
LOTTERIES
Intralot was first awarded a ten year licence
in 2001 to run and administer state sponsored
lotteries. Intralot lottery operations in Peru
commenced on December 1 2003 with the
launch of a daily lottery called Gana Diario
(Win Daily) which was initially distributed
through 1000 points of sale. In October 2015 the
company announced plans to further consolidate
its operations in the region and strengthen its
position as market leader. In order to achieve its
goals the company will invest over US$4m to
expand its outlets from 3,600 to 5,000 by the end
of 2016.
URUGUAY
CASINOS AND SLOT MACHINES
There is no cap on the number of casinos nor
is there a limit on how large they can be in
Uruguay. There have been casinos in Uruguay
for more than a hundred years, and compared
to its Latin American neighbours, where casino
gaming has been a divisive and politically
charged issue, casino gaming has been relatively
uncontroversial. This is largely in part due to a
rather unusual way of regulating casinos called
the “mixed system.”
Casinos in Uruguay had been state owned and run
since the 1950’s. Then, in 1996, the government
began to offer licenses to the private sector.
Setting no limit on the number of tables or slot
machines, the government, in return for 35 to 45
percent of profits, would run the casino while the
investor would be responsible for equipping and
furnishing the casino, overseeing security, and
promoting the casino, particularly to tourists.
Many feared that the involvement of the state
would negatively impact profits, but this has
proved not to be the case. In fact, year-on year
gaming income has increased instead, and many
traditional tourist locations that had fallen into a
state of disrepair have, with the help of the private
sector, been brought back to their former glory.
Today, around 80 percent of gaming tax revenue
comes from the casinos operating under the mixed
system.
Beginning in 2013 the newly appointed head of
the Uruguayan Casino Board Javier Chá initiated
a number of renovations of state run casinos
which had been recording record profits over
the previous years. Combined the entirely state
owned casinos along with those casinos operating
under the mixed system recorded profits of $100m
in 2012. 2012 also saw a number of important
casinos opening and major renovations including
the $70m renovation of the iconic Casino Carrasco
in capital Montevideo.
The casino industry has continued to perform well.
According to the Uruguayan Casino Control Board,
gross gaming revenues stood at around US$212.7m
in 2015, a seven per cent increase compared to
2014. In the same period slot parlours recorded a
net income of US$36.5m – 9.5 per cent more than
in 2014.
However an increasingly pressing issue has
been the growth of illegal slot parlours and slot
machines located in shops and small businesses
which have led to calls for reform. In 2014 the
government of President Tabaré Vázquez sent a
bill to the House of Representatives which would
ban slot machines outside of casinos and slot
parlours.
23
The bill had already already been stalled for
seven years but was dropped due to growing
controversy and a lack of consensus on the issue.
During the the first Vázquez administration
(2005-2010), the executive sent a bill to
parliament banning slot machines in shops and
established a restrictive policy on gambling but
the bill was never passed. Then the administration
of José Mujica (2010-2015) put forward regulation
which would allow slots in local shops with three
slot machines being permitted per establishment
with provisions in place that they could not be
in close proximity to schools, colleges and sports
centres.
The latest attempt to change Uruguay’s gaming
law are now up for debate again and the Chamber
of Deputies could approve a new gaming act in
the coming months. As well as addressing the
issue of slot parlours and slot machines outside of
casinos the new law shifts gaming control away
from parliament to a new gaming control board
and the executive branch. It also aims to grant the
executive and the new board the right to give the
green light to new games - something which has
traditionally been the role of parliament.
According to the draft of the new law, the
government is also seeking to create a new
governing body called the National Management
of State Gambling and Casinos (Administración
Nacional de Casinos y Juegos de Apuestas del
Estado) which would exercise state control over
all types of gambling. While there is opposition
to the new act support is growing as the new
act addresses the long running issue of slot
parlours outside of casinos. Although there are
no official figures it is estimated that there are
around 20,000 illegal slot machines in Uruguay.
Combined they generate around US$3.2m a week.
HORSE RACING AND OFF TRACK BETTING
There are two major racetracks in Uruguay.
El Hipódromo Nacional de Maroñas was
first established by the British community in
Montevideo in 1847. In 1997 the Jockey Club went
bankrupt and in 2002 the government auctioned
it off. Five years later Hipódromo de Maroñas
Hípica Rioplatense S.A (a joint venture between
Codere and the Sociedad Argentina de Medios
S.A) bid for and won the right to reopen the track.
Codere also runs a racino at the track.
Codere also operates Las Piedras Racetrack,
following the granting of a new license for the
ownership, use and operation for a period of 30
years. Las Piedras racetrack opened in 2012 and
Codere also operates a racino at the track. In
addition Codere runs a number of off track betting
shops in Uruguay. However horse race betting
via betting shops fell by 6.4 per cent and stood at
US$1.9m in the first nine months of 2014 according
to the latest statistics released by the gaming
board
24
There have though been a number of positive
developemtns of late within the industry. In
September 2015 betting on local pools at the
Uruguayan racetrack of Maroñas and the
racetrack of Las Piedras began in the United
States via The Latin American Racing Channel
(LARC). It marks an important milestone for the
Uruguayan horse racing industry as it seeks to
expand its audience to the United States and it’s
the first time that customers based in the United
States are able to place their bets directly on the
pari-mutuel pools from Uruguayan racetracks.
BINGO
Bingo is not popular in Uruguay and is limited to
charitable bingos
SPORTS BETTING
Sports betting is permitted and Codere runs
twenty seven sports betting shops in Uruguay.
ONLINE
Ex Director of the Uruguayan Gaming Commission
Fernando Nopitsch in 2008 outlined his intention
to legalise online gaming. Representatives of the
state casinos met in the same year to discuss how
online gaming could be regulated in Uruguay but
these plans were ultimately abandoned.
At present online gaming continues to operate
in a grey area in Uruguay. There are currently
no regulations in place that establish a legal
framework for online gaming nor are there
any penalties in place for players gambling
via offshore websites. As a result Uruguayans
can bet abroad via offshore gaming sites by
using international credit cards without fear of
prosecution by the authorities.
However, the new bill now being considered in
the Uruguay Congress does seek to address the
issue and would green light online gaming. While
the bill does not directly regulate the conditions
under which it will offer online gambling in
Uruguay, it is the first step as the government
seeks to become the only authorised provider
of online betting. Crucially, the new bill would
give the state the monopoly over interactive and
phone betting while off shore companies would be
banned from offering their services locally.
LOTTERIES
Banco de Quinielas is licensed by the government
and is a private company that administers
Uruguay’s lotteries under the control of the
government agency, The National Directorate of
Lotteries and Quinielas. The new proposals now
under debate in the Uruguayan House of Deputies
seeks to create a new Betting and Gaming
National Comptroller’s Office (Dirección Nacional
de Contralor de Apuestas y Juegos de Azar) which
would be responsible for the supervision of the
quality of accounting and financial reporting
of State Lotteries. This body would replace the
Uruguayan Board of Lotteries and Pools Betting
(Dirección Nacional de Loterías y Quinielas).
Lottery and Quinela betting is on the rise and
increased by as much as 15 per cent in 2015
compared to 2014 reaching US$387.3m. The most
popular game was Quinela (pools betting) with
revenues standing at US$154m. In second place
was Cinco de Oro. Revenues for the lottery game,
which is drawn twice a week, reached US$84.1m,
an increase of 30.8 per cent compare to last year.
Revenues had fallen by 5.4 per cent in 2014.
In third place was Tombola with gross gaming
revenue standing at US$82.7m, an increase
of 13.9 per cent. Revenues for instant product
Quinela Instantánea stood at US$32.4m recording
an increase of 45.9 per cent. Sales for sports
betting game Supermatch grew by 15.3 per cent
to US$10.1m. Meanwhile betting on the national
lottery also grew albeit less so increasing by 2 per
cent and stood at US$23.7m.
According to Director of the Lottery Luis Gama
part of the reason for the growth of lottery gaming
is that the number of draws have been reduced
and there has been an increased focus on its core
products. Meanwhile, the sharp rise in popularity
of other games such as instants have been down
to successful adverting campaigns.
VENEZUELA
CASINOS AND SLOT MACHINES
The Venezuelan gaming sector is increasingly
under siege by a government fundamentally
opposed to gambling on principal and the gaming
landscape has seen a remarkable transformation
since 1996. In 1996 the market looked potentially
lucrative for operators as Venezuela passed a
gaming which allowed for casinos to be built in
five star hotels with a minimum of 200 rooms.
In common with many gaming laws in South
America the main purpose of casinos would
be to encourage tourism and add to tourist
infrastructure in the region. It was estimated
that within a very short time at least thirty new
casinos would be up and running in Venezuela as
long as they were part of a hotel.
Three years after the act was passed and Hugo
Chavez was elected to power. Chavez did not ban
casinos or bingo outright but the industry saw a
great number of closures during his fourteen year
long rule which saw huge tax increases across the
bingo and casino sector. Combined the closures
left an estimated 100,000 people in the industry
out of work. Although the crackdown began
slowly it went into overdrive in 2011 after the
National Commission of Casinos, Bingo Halls and
Slot Machines under the Ministry of Justice was
given powers over the industry whereas before
local governments were allowed to approve
casinos and bingo halls.
Since its establishment the commission has
carried out numerous onsite inspections and raids
which have almost always ended in closures.
These closures continued apace especially in 2011
when the Commission closed down almost all of
the bingo halls and slot parlours in the country
and revoked licences which had been granted
by local authorities. Chavez’s successor Nicolas
Maduro seems equally opposed to gaming and
it is estimated that the industry will continue to
decline under his leadership.
HORSE RACING AND OFF TRACK BETTING
Horse racing has been a popular sport in
Venezuela for over sixty years and is the second
most popular sport after baseball. The government
via the regulatory body SUNAHIP tightly controls
betting at the country’s four racetracks and
1,200 off-track betting houses. According to
The National Superintendent of Horse Racing
Activities (SUNAHIP) on any given Sunday tax
gaming revenue from the largest racetrack - La
Rinconada in Caracas stands at around US$3m.
Illegal gaming remains an issue and it is estimated
that illegal betting on horse racing is around 50
to 60 times the amount that is bet via official
channels. Criminal gangs have made inroads into
the industry and have been accused of bribing
race officials, jockeys and drugging race horses.
Illegal gambling is driven by the government’s
limit of 1,000 bolivars on bets (US$158 according
to the official rate and US$10 at the unofficial
rate). The illegal operations often operate from
inside state licensed gambling halls.
As well as the betting limit imposed by the
government the industry has been impacted
negatively by the socialist government’s political
stance on gaming. While in power Chavez publicly
came out against the industry especially when
it came to the resources spent on the raising
of thoroughbred race horses and initiated a
number of moves which hindered the growth of
the industry including a temporary ban on the
broadcasting of races on radio and television.
Under his successor Maduro, organised crime has
continued to make inroads into the industry.
Apart from off track betting shops and tracks
Venezuelans can also bet on the results of horse
races staged in Venezuela nationwide in the Selco
Group run lottery outlets. Selco has a nationwide
point-of-sale network for lottery tickets and
allows customers to bet on the outcomes of local
horse races in a game called 5y6. The game allows
customers to bet on the results of one to six races
in tracks all over Venezuela.
SPORTS BETTING
Sports betting is permitted and the largest
provider of sports betting is NIGHT - National
Group Development Technology. Other
companies which offer sports betting are
Inmejorable, Kingsportbet, Sport Play de
Venezuela, Corporación Turf e Inversiones Turf,
Universal Circus Games, Castanhola Sistem
and Grupo Cordialito Replay. The government is
currently conducting an investigation into these
companies to ensure that they are complying with
the terms of their licences.
Selco lottery machines also offer sports betting
via its terminals. Venezuelans can make a wide
variety of parlay bets on a number of sports
including baseball, football and boxing. Bets can
also be placed online via its website www.parley.
com.ve
BINGO
In Venezuela, where in 2010 there were just
over sixty bingo halls, which in many cases were
attached to a hotel, there now remain only a small
handful in the wake of the continued crackdown
on the gaming industry.
ONLINE
Online gaming is not currently permitted under
Venezuela’s gaming laws.
LOTTERIES
There are both instant and draw lotteries available
at over 3,000 points of sale throughout Venezuela.
The oldest lottery in the country, established
in 1926, is the Lotería del Táchira. Other major
lotteries in Venezuela are the Oriente Lottery,
Caracas Lottery and the Zulia lottery. All lotteries
are overseen by the Comisión Nacional de Lotería.
Illegal lottery gaming still continues to thrive.
There are an estimated 36,000 outlets operating
illegally in Venezuela.
The Triple Gordo lottery is drawn every Sunday
and is the leading lottery game in Venezuela and
is run by the Selco group, a Venezuelan company.
Selco designs, develops and merchandises lottery
games, including online games for horse racing
and other sports betting games in Venezuela
and works closely with a number of state
owned lotteries. While the casino sector is in
sharp decline lotteries remains very popular in
Venezuela. Per day in Venezuela there are around
32 separate lottery draws.
The gaming law (Ley de Juegos de Azar Num. 221)
was initially introduced in 1948 and this states
that casinos can only be situated in hotels and
the specifics are then divided into three territorial
zones:
• Zone 1 – San Juan (not including the historical
zone), Carolina, Loiza and Rio Grande. In this zone
the hotel must have a minimum of 300 rooms and
total cost of project must not be less than $30m,
hotel must have a swimming pool or be near to
the beach.
• Zone 2 – Includes the rest of the geographical
area and territory not included in Zone 1 or 3. In
this zone the hotel must have a minimum of 200
rooms and investment cost of not less than $20m
It must have a beach or swimming pool facilities
and facilities can include golf.
• Zone 3 – This is the historical part of the city and
the international airport zones. In the historical
zone hotels must have a minimum of 125 rooms
and investment of not less than $10m. Hotels in
the airport must have 100 rooms minimum and
investment of $5m minimum.
Each operator will pay a certain amount for
the gaming franchise based on earnings. So for
example those with total gaming revenues of
$25m pay $50,000 annually for the franchise.
Those with $25-50m pay $100,000, those with
$50m-100m pay $150,000 and those over $100m
revenues pay $200,000.
Players must be over ages of 18 years.
Each casino can have 1.5 slots per player in
proportion to the number of playing seats at the
gaming tables up to maximum of six slots per
player.
In August 2013 the proposal to legalise slots
outside of casinos was defeated. The final version
of the House Bill 394 and 916 (Act 48) was signed
and this omitted any reference to introducing
VLTs and AEMs. The Bill had been a heated
discussion for months.
CASINOS AND SLOT MACHINES
All casinos must be located in hotels by Puerto
Rican law and are a huge pull for visitors to the
island although it is said 90 per cent of casino
clients are actually locals. There are 21 casinos
in total open at the moment and the main large
casinos are found in San Juan and there are
relatively few in the south of the island.
The initial proposal was to introduce video
lottery slots in bars, shops and other areas in
a bid to stamp out illegal operations. If illegal
machines were eradicated the industry claims a
further $180m could be added to the revenues.
The argument against however stated that if
slots were legally permitted outside of casinos
this could have a huge adverse affect on casino
incomes. Since 2005 casino revenues have
dropped consistently.
The casinos are overseen by the Compañia de Turismo
and the Division de Juegos de Azar which looks after
the locations, taxes and regulates the sector. Tourism is
responsible for six per cent of the island’s GDP.
In a bid to reduce the government’s deficit (around
$35bn) the possibility of introducing slots (House
Bill 916) outside of casinos was discussed at
length and EMPRECOM (Empresa Puertorriqueña
PUERTO RICO
25
de Recreacion Comercial), which is a company
managing the business of entertainment machines
on the island, fought against the proposals. They
claimed the bill, which would permit a foreign
company to operate the machine halls, which
would force many small and medium businesses
to close.
The idea was to regulate up to 20,000 slots
in small shops although some suggested an
amendment to permit them in ports and airports
only. As an example some 300 slots are operated
at Luis Munoz Marin Airport in Isla Verde
privatised through Aerostar Airport Holdings and
produce the treasury $12m per year. Casinos are a
huge tourism pull in Puerto Rico and last year the
government received some $61m from gambling
taxes which represents 72 per cent of its revenues.
At the moment illegal slots operate outside of the
gaming act rules and do not pay taxes or have
operating licences and also pay cash prizes which
is not permitted. Many players say they prefer
gambling in seedy bars on illegal video slots due
to the payout percentages which are substantially
higher than those in the casinos.
Although in August the House Bill 916 did not
permit slots outside of casinos it did however
bring some changes. Firstly the number of slots
machines allowed in casinos has been increased
to eight machines per player seated or standing in
proportion to the number of gaming tables.
The slot machine revenue distribution formula has
also been altered and now after the first $315m
to $495m the government will then retain 55 per
cent of the funds whilst the casinos retain 45 per
cent. The excess after the $495m is split 80-20
in favour of the casino operator. Previously the
casinos kept 80 per cent after the first $315m.
In 2014 funds to distribute only reached $296m,
a drop of $19m from funds back in 2008.
Meanwhile the Internal Revenue Code was signed
in Act 40 which means a B2B tax will not be
introduced for the casino industry.
Ismael Vega of the PRHTA said: “Even though
we are satisfied with the accomplishment with
the intent to legalise slot machines outside of the
casino, the law does not look after the issue of
illegal slot machines. Our intention was to block
the Department of Treasury from continuing
to issue licences to operate entertainment slot
machines. This is a subject that we continue to
follow up.
“We need to eliminate illegal slot machines so that
the money flows through the casino’s regulated
system. We need more flexibility in our operations
and that a model is adopted where weight is given
to those who exceed long scrutiny.
26
“The government intervention should occur
only when something is wrong and a sanction
applies. The government should not enter in the
daily operation and its business strategies. It is
necessary to promote strategies so the island
could be an ideal gaming destination and for
more people to travel to Puerto Rico to sponsor
casinos.”
The PRHTA estimate there are 7,300 slots in casino
hotels and 25,000 more illegally operated slots.
In 2012 slots generated revenues of $313m of
which hotels received $156m and government saw
$157 and the Universidad de Puerto Rico (UPR)
received $61m whilst the treasury received $24m.
This revenue is a drop of $1.8m from the previous
year which is attributed to the proliferation of
illegal casinos or slot halls. Apparently this has
caused some casinos to close including the Hotel
El Conquistador in Fajardo and the Gran Melia
in Rio Grande and Pichi’s Convention Centre in
Guayanilla.. The closure of El Conquistador meant
a loss of $900,000 in income for the government
plus a loss in room tax. Hotels with casinos pay 11
per cent room tax whilst hotels without casinos
pay nine per cent.
Ismael Vega president of PRHTA and also finance
executive at the Ambassador Condado says
they have laid off 30 employees and the casino
industry is going through one of its worst times
with lowest all time revenues of $19m.
Many illegal machines are made by parts
smuggled into the island and whilst legal casinos
invest around $16,000 per slot machines and also
obtain permits whilst illegal machines cost as little
as $2,500 each and owners keep 60 per cent of the
profit whilst the establishments hold 40 per cent.
Meanwhile there is just one thoroughbred horse
racing track in Puerto Rico – El Commandante,
or Hipodromo Camarero, as it has since been
renamed. Horse racing has existed on the island
since 1882 when the first racetrack was built in
Ponce.
There are 2,500 slots operated at the racetrack and
they say illegal machines are to blame for a $58m
loss over the last four years at the racetrack.
In 2014, tote betting operator Sportech did a deal
with Camarero racetrack to operate the island’s
first online gambling site called ganadondesea.
com. Sportech has supplied the track with parimutuel technology for the last 20 years.
Recent developments include the Hyatt Place
Bayamon in Puerto Rico. Construction began in
March 2012 and opened in January 2014. It has
a 156 room hotel with an adjoining 11.500sq.ft
Tropical Casino.
Meanwhile Hyatt Place Manati and Casino is a
104 room hotel with adjoining casino of 10,000
sq.ft being built in Manati, and opened in January
2014. It has been constructed on five acres of land
and includes meeting areas, fitness centre and
swimming pool.
ARUBA
CASINOS AND SLOT MACHINES
Gaming is legal in Aruba and is actually the island
where Caribbean Stud Poker was invented back
in 1988 and today is often called the Las Vegas of
the Caribbean.
Casinos in this country first opened in 1959 and
today there are 12 casinos. For a time gambling
was the island’s main attraction and the casinos
are elegant and large and offer table games and
slots whilst some also offer bingo and sports
betting.
The sector is governed by the Comision Nacional
de Juego (CNC) and governed by the law
Hazardspelen AB 1990 no GT 44. In February 2013
Colonel Danny Ferrer was appointed as National
Casino Inspector of the National Commission of
Casinos
The law gives the Minister of the Justice and Public
the right to authorise casinos which must be
located in hotels with a minimum of 250 rooms.
The fee is AWG2,500,000. Casinos open around
midday and can stay open until dawn and the
currency used is the US dollar.
Aruba is home to a family of five Divi Resorts
which offer accommodation along the beaches
on the Aruba coastline. The island is also host
for many professional poker tournaments and
houses slots from progressive jackpots to nickel
machines. The majority of casinos are located in
the Palm Beach area in the large resorts and also
in downtown Oranjestad.
Stellaris Casino at the Aruba Marriott Resort and
Crystal Casino at the Marina Hotel are the only
two casinos open 24 hours a day. Players must be
over 18 years.
The control of the market is said to be ‘shockingly
bad’ in some reports and there are certainly levels
of corruption and illegal gambling. Apparently
the law states an Aruban resident can only visit a
casino eight times per month maximum although
whether this is actually checked or implemented
is another question.
Gaming tax is levied on the gross receipts from
the gaming operations of a casino which is four
per cent monthly and this resulted in tax revenues
of around US$12m in 2006. Slot revenue is
determined at a factor of 1.55 times the slot win
and outcome then taxed at four per cent.
THE BAHAMAS
CASINOS AND SLOT MACHINES
The Gaming Board for the Commonwealth of the
Bahamas governs the gaming sector and operates
under the Lotteries and Gaming Act Chapter
387 and the Accounting and Internal Controls
Regulations 1993. It is headed by Chairman Andre
Rollins.
The gaming board was established in 1969
alongside the gaming act and there have since
been many amendments to the act including
a 1978 amendment which allowed the Hotel
Corporation to be the only entity allowed to grant
a casino licence.
Today casino gaming remains a special form of
entertainment aimed at the tourism market and
there are three casinos currently open. Players
must be aged 18 years.
There are several issues with gaming in the
Bahamas. Firstly it is only permitted for tourists.
Locals, even residents with work permits, cannot
gamble in casinos.
Many are calling for regulations which make it
fair all round and they want to bring all forms
of gaming operations into conformity with the
laws and this also includes introducing a national
lottery.
This has been talked about since the 1990s but a
referendum was held in January this year and was
rejected by votes despite reports it could bring the
government an extra $20m in tax revenues.
The law banning Bahamians from casino gaming
was made in 1965 when it was also illegal for
locals to work at casino tables. The government
later reversed this latter decision.
If the casino industry is modernised it is said
the Bahamas could see anything between $17m
and $30m in additional tax revenue plus further
employment opportunities. The Bahamas has not
updated its laws since 1969.
At the moment there are a reported 45 odd illegal
gambling houses in New Providence and 12 in
Grand Bahama whilst is it said some $2m is
gambled locally and abroad weekly.
Meanwhile online gaming is not legally permitted
although Atlantis does offer mobile gaming and
tourists can play games on smart phones or
tablet devices by downloading Cantor Gaming’s
application and inputting a password and account
information. This is the first casino to offer such
technology here.
The government has passed legislation to allow
mobile gaming and sports betting in the Bahamas.
The Gaming Bill 2013 replaces the 1969 Lotteries
and Gaming Act and gives the country a chance
to embrace tourism and take advantage of a very
lucrative market.
The Gaming Act permits casinos to offer sports
betting, in-play betting and online gaming,
incentives for junket trips plus iron out several
other issues such as removing prohibition on non
Bahamian residents to gamble. The act was passed
on September 16, 2014..
The Bahamas currently nets around $146m
each year from its gaming industry with annual
revenues per casino reaching $48.6m on average.
The government hopes to now triple this figure
and also increase the $15m the government
currently receives in taxes. Over the last five
years the Bahamian casino gaming gross revenues
had fallen by more than one third from $220m
back in 2007. Although some of this is down to
the recession the bulk of the decline happened in
2008-09 when there was a $50m drop.
The Bahamas is also still lacking an independent
testing laboratory, private salons for VIP gamers,
liberalised gaming credit and the enforcement of
gaming debt.
There are 163 million Americans living within
1,000 miles of the Bahamas and the idea for a
new gaming law would cash in on those figures
offering visitors something more than sun and sea.
There are 276 flights to the Bahamas each week
and 18 of the 25 wealthiest US counties are within
one hours drive of an airport which has direct
flights to Lynden Pindling Airport. The Bahamas
could see a minimum of 200,000 new tourists
annually thanks to the new law.
The Cable Beach Casino opened in 1983 and
in 1988 underwent renovations and was then
renamed the Crystal Palace Resort and Casino.
Many other casinos have opened and closed over
the years and at the moment there are only three
resort casinos now open.
Casinos have seen revenues decline over the last
few years. Crystal Palace saw revenues down
by 18.5 per cent to $22m in 2011. The Bahamas
charges between five and 25 per cent tax on
winnings and takes around $15m from the sector
in taxes annually.
SINT MAARTEN
CASINOS AND SLOT MACHINES
Casinos have always been a huge part of the
island’s tourism industry and as such they have
been permitted to open under fairly lax rules.
There are casinos attached to hotels and other
stand alone sites primarily in Philipsburg which
also serves the cruise ship market.
In 1995 when Hurricane Luis arrived there were
10 casinos of which three were stand alone. Today
there are 14.
Although there is a mix of locals and tourists in
the casinos, back in the late 1990s there was a call
to re-look at the market and how best to proceed
with new gaming establishments.
A study was conducted and consultants focused
on issues such as capacity, expansion, fiscal
impact, licensing and internal controls. The study
also called for a Gaming Control Board to govern
the sector after it reported too many casinos and
an uncontrolled sector.
The first casino to open was in Nassau in the
late 1920s called the Bahamian Club which was
followed by the opening of a small casino on the
island of Cat Cay. At the time they were seasonal
and frequented by tourists.
The report showed that the government was not
receiving its fair share of revenues compared to
other competitive destinations and administration
and financial control issues needed to be
addressed.
In 1964 the first major casino opened called The
Monte Carlo at the Lucayan Beach Hotel until it
later closed in 1974.
Following the report the government then
published its casino policy in 2011 under the title
Rules of the Game. Today the casino sector is not
really governed but operates under the Ministry of
Finance’s Rules of the Game policy.
Meanwhile another casino called El Casino then
opened in Freeport in 1966 but then closed in 1978.
It changed ownership and until 1983 operated
under the Grand Bahama Management until
Princess Casino Limited was granted a licence
to operate the facility. They changed the name to
Princess Casino and in 2000 it was purchased by
DVI Freeport Casino Limited and renamed the
Casino at Bahamia.
In 1967 Paradise Island Casino opened and in 1987
it was purchased by Donald Trump then resold to
Merv Griffin in 1988. In 1994 it was acquired by
Sun International and the name was changed to
Atlantis Paradise Island Casino
This stated that casinos should restrict local player
access to just four times per month maximum.
Sadly this was not enforced and has left the
government wondering if there is really now any
need for this to be in place.
The paper also introduced a maximum number
of casinos on the island and limited it to three
stand alone casinos in the capital which would
be permitted to run alongside the two current
establishments, bringing the total to five in the
Philipsburg area.
27
Plus a further three more stand alone casinos would be allowed on the ‘strip’
(Simpson Bay) in addition to the two existing casinos already there bringing
the total to five in Simpson Bay area. There is also ceiling limit of 10 stand
alone casino in total.
Meanwhile casino in hotels, which are part of hotel developments, will need
to be linked to those with at least 200 rooms. They cannot be located 50m
near to sensitive buildings such as churches and schools.
Minimum age is 18 years. There is still no gaming board set up despite
consistent calls.
In March 2014 a draft budget was presented by the government and the 14
casinos now must contribute more to the society and under consideration is a
fixed fee per table and per slot machines or a 10 per cent levy on payouts.
The budget assumes a fixed fee which means the casino will contribute some
G7.5m to the state. The government aims to collect G1.8m in arrears from the
casinos.
Finance Minister Roland Tuitt is behind the plans whilst the Casino Operators
Association is emphatically against the decision. Casinos do not pay turnover
taxes but monthly fees of G50,000 for tables and G10,000 for slots.
28
Brazilian Gaming Congress
Brazil • Coming soon in 2016
braziliangamingcongress.com
To apply for your place visit juegosmiami.com
@BgCongress
29
juegosmiami.com
30