Operator News
Puerto Rico – Plans to legalise slots come under fire in Puerto Rico
By Phil - 24 October 2018
The President of The Association of Hotels and Tourism of Puerto Rico (PRHTA) has criticised the government over its plans to legalise slot machines outside of casinos.
During a press conference held last week Pablo Torres criticised the absence of a serious and public evaluation of the proposal to legalise slot machines through public hearings and that the legalisation of 30,000 slot machines would cause losses of up to US$149.1m.
In a strongly worded statement the head of the PRHTA said “the lack of a serious and public evaluation of the proposal to legalise slots through public hearings, has led the legislative leaders and the Executive to propose many noble causes for the alleged funds that it would produce while ignoring the adverse fiscal impact that, according to a study by the government itself it would have.”
Torres referred to the latest proposal whereby additional revenue generated by legalisation would be used for a police retirement fund. “Our men and women of the police deserve a decent and safe withdrawal based on a source of reliable income and not on a bet on a measure that nobody has been able to see, evaluate, or validate in economic and fiscal terms.”
According to Torres, “all these noble causes are offered ignoring the multimillion-dollar losses that it would have on the coffers of the government and the University of Puerto Rico (UPR), according to studies of the government itself. It would be taking money out of a place to use it elsewhere.”
Opponents of the new proposals quoted the findings of a study carried out by research company Spectrum which revealed that should 30,000 slot machines be permitted to operate legally then it would decrease casino revenue by between US$149m and US$195m a year. This would mean a loss for the University of Puerto Rico, the largest public university on the island, of US$35.4m per year while the Puerto Rico Tourism Company (PRTC) would lose US$42.5 per year.
Meanwhile Miguel Vega, ex president of the PRHTA, reiterated the call to open up a broad process of public hearings. In Vega’s opinion, the legislature must cite all interested groups, including experts on retirement issues, economists, Spectrum, the Secretary of the Treasury, the Commissioner of Financial Institutions and slot machine owners, amongst others.
Casino revenue is a vital source of funding for the PRTC as well as the biggest state university on the island. Under present rules, casino revenue is divided equally between the operator and the state. 45.45 per cent of gaming revenue goes the University of Puerto Rico, the largest public university on the island, 15.15 per cent goes the Treasury, 25.8 per cent to the PRTC and 13.6 per cent to the Committee for the Development of the Tourism Industry. As well as taxes on gaming income, the government also taxes an additional 2 per cent on hotel rooms when the hotel is attached to a casino.
The casino industry in Puerto Rico has been in crisis for a number of years due to the negative economic situation and a lack of government oversight when it comes to illegal gaming. While slot machines outside casinos are banned under Puerto Rico’s gaming act they have spread widely and at a fast pace and are now commonplace in bars, shops and in other small businesses. Some estimates put the number of illegal slot machines as high as 40,000 with the illegal sector worth an estimated US$1.5bn. In addition illegal slot parlours are also commonplace and can in some instances be large scale.
Caption: Slots at the Puerto Rico Ocean Casino in the Marriott Hotel
