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Puerto Rico – Court battle continues over Puerto Rico’s VLTs

By - 5 January 2016

A court in San Juan has denied the motion to dismiss filed by the Department of the Treasury over the case brought against it by the Puerto Rican Association of Hotels and Tourism (PRHTA).

The PRHTA has challenged regulations which would lead to video lotteries (VLTs) being permitted in the country and in July the organisation took their complaint to court claiming that “the contested regulations are illegal and would cause the loss of thousands of jobs in the tourism sector on the Island.”

The PRHTA claims that new regulations violate several laws as well as public policy on gaming machines outside casinos including rules that only the legislature may make changes to gaming laws and that the Secretary of the Treasury is limited to regulating the operation of games and is not permitted to authorise new games. It also claims that VLT’s do not meet the requirements as set out under the amendments of Act 10-1989 when it comes to player’s choice when it comes to selecting the combination of digits or numbers, nor does it meet rules when it comes to public lottery draws.

In addition the PRHTA claims that allowing for VLT’s on the island amounts to the raising of an additional source of income without any intervention on the part of the legislative branch which goes in direct contravention of the provisions of the Puerto Rican constitution.

Judge Gloria Maynard Salgado, while explaining the reasons for her decision, stated that the PRHTA had grounds to challenge the new law on the basis that the exclusive operation of casinos could be at risk if VLT’s were given the green light.

In August it was announced that Puerto Rico’s Treasury Department would begin the tender process for VLT’s in the first quarter of 2016. Treasury Secretary Juan Zaragoza justified the decision saying that new rules would legalise between 20 and 25 thousand machines in three years. Mr. Zaragoza said that machines now operating in illegal casinos, bars, bakeries and even shopping malls, could join the network of legalised VLT’s once changes to gaming legislation are made.

However, in July Miguel Vega, President of the Board of Directors of the PRHTA said that they would continue to lobby against the new law and warned that should the Treasury go ahead then it would lead to a battle in court.

The issue of VLT’s has been a controversial one for some time. In 2014 Spokesman for the People’s Democratic Party in the Senate, Anibal Jose Torres, described the process surrounding the approval of VLT’s as questionable and claimed that the previous administration had tried to pass the bill “under the table.”

Should the government go ahead and give the green light to VLT’s it could have a devastating effect on the casino industry which is a major contributor to the Tourism Board as well as the only State University on the island. Last year saw a number of high profile closures including the closure of the Dorado del Mar Beach Casino and the casino in the Condado Plaza Hotel in San Juan. Resources made from the casino industry have diminished from US$315m in the years between 2007 to 2008 to US$272m during the last fiscal year.

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