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Chile – Senators attempt to extend licences for 15 years

By - 25 July 2014

In what could be their last chance, lawmakers in Chile are attempting to extend the municipal casino licences for another 15 years.

A new bill introduced by Senators Francisco Chahuán, Carlos Bianchi, José García Ruminot, Ricardo Lagos Weber and Iván Moreira asks Chile’s President Michelle Bachelet to put into law legislation which would allow the municipal governments an extension of their licences.

An extension is justified, they argue, because it would give local governments the time to plan and implement new ways to make up for the inevitable shortfall in tax income that will be lost once the casinos come under the supervision of the Chilean Gaming Control Board. However, the Senators face an uphill struggle as similar legislation was strongly rejected only in March in Chile’s Lower House. This was after lawmakers claimed that it was unfair and that municipalities with local government run casinos had abused their rights.

The new law also seeks to protect the jobs of workers currently employed by the municipal casinos should the casinos eventually come under the control of private operator. According to the new bill, 9,000 workers are employed by the municipal casinos which also provide an additional 4,000 indirect jobs. In 2013 an agreement was made both in the Lower and Upper House which would have ensured that new operators would be legally obliged to hire at least eighty percent of workers currently employed by the municipal casinos. However, no such agreement has been made under the present administration.
The issue of municipal casinos has become increasingly acrimonious of late as the deadline approaches. Despite a wide number of demonstrations nationwide in which city mayors have highlighted the importance of their casinos to local budgets, the government for now still looks set to turn them over to the Chilean casino Board as originally planned.

The background to this is that 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.

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