Legislation
Puerto Rico – Puerto Rico considering slot machine expansion
By Phil - 21 August 2018
The Senate of Puerto Rico could introduce a number of amendments to the current tax reform bill to allow an intermediate number of slot machines on the island.
According to the Senate President, Thomas Rivera Schatz under current operators will be able to officially pay out cash prizes and their machines will be connected to a centrally controlled server so that the government may tax them accordingly.
Rivera Schatz said that new regulations were needed and operators had been requesting changes to Puerto Rico’s gaming laws for some time: “This is a source of additional income that is not under consideration that we do not have today,” he said. Full Legalisation would generate about US$100m to the treasury.
However, Rivera Schatz pointed out that the location of these machines would have to be regulated in order to prevent minors from gaining access.
It is the first time that the leader of the house has commentated on the issue. Rivera Schatz argued that allowing these machines to generate cash prizes would not necessarily mean unfair competition for the casino industry, as they target a different customer base.
“Any measure that includes precautions and has sufficient controls so as not have a negative impact on society deserves our support,” he said. “These entrepreneurs want to contribute, they want to contribute and it is an opportunity that we have to take advantage of.”
In April Governor Ricardo Rosselló announced the introduction of his bill for proposed changes to the Puerto Rico Internal Revenue Code. The proposed reform, H.B. 1544, seeks to simplify the existing tax structure not only by effecting fiscal measures that promote economic growth but also by fostering an environment of voluntary compliance from all sectors.
Illegal gaming has been on the rise for a number of years. Part of the problem has been a lack of government clarity when it comes to the difference between AWP machines and slot machines.
In July 2014 the government passed Law No. 77 (Ley Núm.77 2014) which gave the regulatory body PRTC (The Puerto Rico Tourism Company (PRTC) the authority to monitor and supervise the operation of illegal gaming machines and imposed much stiffer penalties on those found to operating outside of the law. It also provided a much clearer definition when it came to the differences between “Máquinas de Entretenimiento de Adultos” (Adult Entertainment Machines) as they are known locally and slot machines.
According to the definition in the new act Adult Entertainment Machines may not award prizes of any kind, are designed primarily for entertainment purposes and the outcome depends entirely on the player’s skill, whereas the result of slot machines depend entirely on luck and award cash prizes. The law expressly bans slot machines in department stores, chemists, bakeries, supermarkets, petrol stations, supermarkets, shops and restaurants, as well as hospitals, offices and government facilities and banned standalone slot parlours as well.
Faced with the new rules slot parlour and machine owners appealed to the courts but in 2016 the courts ruled that the PRTC was acting legally and declared that slot machines outside of casinos were indeed illegal.
However, despite a crackdown and raids these measures have done little to prevent the overall decline in the industry. There are still around 7,000 legal slots compared to around 25,000 illegal slots on the island according to some estimates. In addition casinos have continued to close at an alarming rate with seven closures over the last two years alone leaving hundreds jobless.
Caption: Slots in the Sheraton Puerto Rico
