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Puerto Rico – Puerto Rico loses millions in gaming tax revenue

By - 20 June 2014

The government of Puerto Rico lost out on an estimated US$8m between 2010 and 2013 due to its failure to apply taxes to slot machines operating on the island.

According to statistics released by the countries Internal Revenue Office (OCPR), the government failed to collect taxes on the 3,569 slot machines which are licensed to operate in bars and restaurants.

The OCPR found that no tax had been applied for licence fees on any of the slot machines from July 2010 to December 2013. The annual renewal of licences cost US$2,250 per year. As a result if all the operators had paid the corresponding licence fee then the government would have raised the sum of $8,084,250. This total is 42 per cent of total revenues (US$19.1m) which the treasury obtained for the renewal and issuance of licences from tax years, 2008 through to July 2010.

The news comes at a time when the industry is coming under increasing scrutiny from the government as controversy continues to grow over the gaming industry. While slot machines are permitted under licence in restaurants and bars, law forbids slot parlours outside of casinos.

However, slot machines usually attached to small businesses or stand alone establishments are growing rapidly on the island and have been blamed for a steady decline in revenues for the casino industry. It is estimated that there are now 45,000 illegal slot machines on the island. In February 2013 the government initiated an investigation into illegal gaming after a number of casino closures including the closure of El Conquistador casino which left 150 people jobless.

Lawmakers have been divided as to how to solve the issue with some calling for an outright ban while a number of Senators have proposed granting licences to slot parlours in order to meet the shortfall in pensions for state workers.

Meanwhile, the government continues to lose out on gaming tax revenue. In April the Ministry of Tourism predicted that income generated by slot machines will stand at US$275m at the end of 2014 which will be a decrease of US$20.7m when compared to 2013.

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