Operator News

Chile – Results of Chile’s municipal casino tender due in June

By Phil - 28 February 2018

The results of the tender for the seven Chilean municipal casinos are now expected to be announced between June 1st and June 19th, according to local press.

Casinos licences are up for tender in the municipalities of Arica, Iquique, Coquimbo, Viña del Mar, pictured, Pucón, Puerto Varas and Puerto Natales. While only two operators Enjoy and Sun Dreams have made bids for the largest casinos, it is believed that the tender process will have a huge impact on the industry. In 2017, the municipal casinos generated revenues of US$224m.

The technical and economic hearings for those communes affected by the new licences was held between September 25th and October 12th. Once this was over the Chilean Gaming Board (SJC) began its technical evaluation of the new casinos projects. The SJC has 120 working days to complete this stage of the process, which ends between 20th March and April 6th 2018. The results will then be put forward to the Resolution Council, the body in charge of ratifying or requesting revisions. The Resolution Council then has forty days to review and if a revision of the scores is required, the SCJ must respond within a maximum period of five days. Once the evaluation is completed and the scores awarded, the SJC must dictate a resolution indicating the final scores for each of the applicants and call a hearing for the financial stage of the bidding process.

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.

In March 2016, the SJC published the requirements for the 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.

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.

However the process which has been fraught with controversy. In October 2016, the SJC announced that it had decided to postpone the hearing for the submission of tenders for the bidding for the municipal casino licences, which had been scheduled to take place on November 4th. Companies such as Campos del Norte S.A, Inmobiliaria Proyecto Integral Coquimbo, Inversiones del Sur S.A. and Inversiones Marina del Sol had pointed out a number of shortcomings as well as a lack of information when it came to the process initiated by the SJC via the Santiago Appeals Court. They also warned that the demands put on operators applying for the casino licences were excessive and would make the businesses unprofitable. However, at the end of May 2017 the Supreme Court unanimously rejected the writs of amparo, a remedy for the protection of their constitutional rights put forward by investors – meaning that the licensing process could go ahead.

Projects for the new municipal licences will be awarded points and judged on a wide number of different criteria by a number of different branches in the government including local and regional governments, the Tourist Board, the Ministry of Interior and Public Security and the SJC. Points will be awarded on how the casino will fit in with local communities and into regional development strategy. The SJC will also evaluate the project on how it will impact tourism, and will take into account the location, design and the quality of the proposed facilities.