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Puerto Rico – Tender process to begin for Puerto Rico’s VLTs

By - 15 September 2015

The Finance Minister of Puerto Rico, Juan Zaragoza, and Assistant Secretary of Lotteries, Antonio Perez, have confirmed that the tender process for those interested in implementing video lottery systems on the island (VLT’s), will begin this month.

The duration of the contract will be between eight and 12 years, and VLT’s are expected to begin operations in the first six months of next year.

During a roundtable Mr Perez said that the tender process will only be made up of companies which the Ministry invites to bid due to the highly specialised nature of the VLT market. He went onto say that the exact business model has yet to be defined as have much of the finer details due to the fact that VLT’s were only given the go ahead in June.

“In this particular case, the way that compensation will be defined is based on net income. These are the profits after the payment of awards. That will depend on the model we adopt. If we assume the costs of much of the initial investment, the percentage will be less. If the costs associated with these terminals are covered by the third party, the percentage will be lower. This will depend on the business model that we decide upon and we are in that process now,” he said.

Meanwhile, the Finance Minister Mr. Zaragoza also announced that the search would begin for a new operator of the Electronic Lottery which is currently operated by Scientific Games as the contract to run the game expires on 30 June 2016. The winner of the tender process will be allowed to operate draw games Loto, PowerBall, Pega 2, Pega 3 and Pega 4.

The licence will be for the duration of 10 to 12 years and the operator will receive between 3 and 4 per cent of earnings. The Finance Minister highlighted the difficulty of the new tender process saying that: “We have started the process now because, if you select a new supplier, the logistics of changing the whole operation is complicated, because we cannot stop selling electronic lottery tickets. The winner, if it is a different one from the current operator, will have to set up terminals while still selling tickets for the current vendor.”

The announcement comes at a time when the Tourism Company (Puerto Rico’s Tourist Board) along with the Department of Justice has initiated a new campaign to eradicate illegal gaming. Since December last year together they have launched a series of raids and have already confiscated over 4,000 slot machines and imposed fines of $1.5m.

According to Executive director of the Tourism Company Ingrid Rivera Rocafort the new crackdown is already paying dividends. “With these operations we have seen a pause in the fall of revenue in casinos including even with the two recent closures of casinos that were recorded this year. This last fiscal year (2015) 3 per cent of the industry closed down. However, this was less when compared with the fall of the previous year (2014) when that was six to seven per cent,” she explained while emphasising that the most recent figures show a growth of one per cent.

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