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Argentina – International investors pull out of Buenos Aires tender as Peso plummets

By - 10 July 2018

Only three of the eight companies initially interested in the tender for the slot machines located in the state casinos in the province of Buenos have submitted their bids, according to local daily La Nación.

The opening of bids were made last week at the headquarters of the Provincial Institute of Lotteries and Casinos (IPLyC) in the city of La Plata. Boldt, Casino de Victoria and Oasis Entertainment were the only three bidders meaning that Boldt could well continue to be the key player in the province as it is now only competing against two smaller local gaming companies. In addition neither Casino de Victoria or Oasis Entertainment put forward an offer for the 1,600 slots in the Trilenium casino in the city of Tigre (the largest casino by far).

In April Codere, Enjoy and Boldt, which currently operates 2,600 slot machines in the province, were amongst the companies that had bought the terms and conditions in return for $500,000 with companies based in Paraguay and Brazil also taking part.

However, the foreign parties that had bought the bidding documents decided not to take part in the tender, apparently due to the recent fluctuations of the peso. The peso is now the worst performing emerging market currency and has lost as much as 19 per cent of its value since the start of this year. Annual inflation stands at more than 20 per cent. Argentina in an effort to avoid a financial crash and rescue the currency from a downward slide against the dollar was able to secure a US$50 billion aid package in June from the International Monetary Fund. However, the peso fell to a record low for the second day after the IMF deal and last week the peso fell again by 3.3 per cent meaning that investors are increasingly wary with fears rising that Argentina could once again fall into recession.

The seven casinos will be tendered in three lots, which combine the most and least profitable rooms, so that there are offers for all of the casinos. The tender for slots for the Trilenium will be tendered alongside the casino in the coastal resort of Pinamar. The slots in the Central casino in the resort city of Mar del Plata will be tendered alongside Monte Hermoso, while slots for the Hermitage casino (also in Mar del Plata) will be tendered alongside the slots in the casinos in the cities of Tandil and Miramar.

The first company to buy the terms and conditions was Boldt SA. The second company to sign up was Yojne SA, an anagram of Enjoy, the Chilean firm that owns the Conrad of Punta del Este and the Mendoza casino. The third list was acquired by Codere. Smaller locally based companies also bought the terms and conditions.

Under current rules, operators of the slots of the Buenos Aires casinos are left with around 55 per cent of the “net win” generated by slot machines. The province receives the remaining 45 per cent of this but must pay for maintenance, salaries and uniforms as well as services and security. Unlike bingo halls, casinos belong to the province.

The tender process for the 3,860 slot machines operating in the seven casinos was made official after Resolution 34/2018 appeared on January 30 in the government’s Official Gazette. According to the resolution, the new operator will need to invest in much needed building and infrastructure improvements and is permitted to build additional entertainment facilities.

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