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Chile – Chilean lawmakers reject municipal licence extension

By - 21 March 2014

In an acrimonious debate Chilean lawmakers have rejected plans to extend the municipal casino licences meaning that from 2016 seven casinos will come under the supervision of the Chilean Gaming Board.

Tax will be split equally between the local municipality and the central government.

The project which sought to ask the president of Chile Michelle Bachelet to extend the concession to local casinos was put forward by Deputy for Viña del Mar Osvaldo Urrutia in the Chamber of Deputies but was rejected by 31 votes to 37 against. The project, which would have asked for a repeal of Article 3 of Chile’s gaming laws, met with strong opposition in particular from the Deputy representing the city of Quilpué, Marcelo Schilling.

In presenting the request to the Lower House, Deputy Osvaldo Urrutia argued that Viña del Mar is one of the most populous in Chile and would struggle to meet requirements  without a casino.

“Viña del Mar has had a casino for 85 years,” he said “which means a significant income to its budget, and it will not be able to continue to provide a range of services to the community. We must not forget that the municipality has many properties exempt from the payment of fees so we are asking the President to repeal the article and give us time to look into a  new law which does not expropriate the resources that these communities have had for such a long time.”

However, Deputy Schilling argued that municipalities with casinos had abused their rights and as the city of Quilpué was within 100 miles of Viña del Mar it would not be able to have a casino. According to Chilean gaming law no new casino may be built in capital Santiago, there cannot be more than three casinos per region and a casino may not be located within 70km of an already existing casino.

The issue of the municipal casinos has become increasingly urgent of late with local lawmakers concerned that they will soon lose out on millions of dollars of tax revenue from casinos located within their jurisdictions. Last week mayors from the seven municipalities which operate casinos in Chile met in Viña del Mar to discuss the next stage in their plans to protect their casino concessions. Head of the campaign and Mayor of Viña del Mar, Virginia Reginato confirmed that The Association of Municipal Casinos planned to make a formal request to meet with newly elected President Michelle Bachelet in March to underline their fears.

In 2005 Chile passed a gaming law which allowed for the construction of eighteen additional casinos to the seven municipal casinos already in operation. The licence for the seven other casinos in Chile ends on 31 December 2015. The casinos which were already licensed before the new act come under the supervision of the local municipalities where they are located and are a vital source of funding. Combined they generate around US$90m a year in tax revenue for local governments. However, from the beginning of 2016 the seven casinos will come under the supervision of the Chilean Gaming Board and the tax will be split equally between the local municipality and the central government.

The vote in the Chilean Lower House casts serious doubt on the possibility that municipalities will be able to continue to run casinos as they have in the past. Local lawmakers had hoped for at least a transitional period to allow them to make fiscal adjustments which would make up for the inevitable shortfall in casino revenue.

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