Legislation
Puerto Rico – Slots outside casinos one step closer to regulation in Puerto Rico
By Phil - 14 February 2019
The legalisation of around 25,000 slot machines that operate outside of casinos in Puerto Rico is one step away from becoming a reality after the Puerto Rico Tourism Company (PRTC) presented the document that establishes new rules over the industry.
In accordance with the regulations – which must now go to a public hearing process – businesses that house these machines on their premises must comply with a series of new requirements.
New rules would limit the number of slot machines to ten per establishment. In addition they will not be allowed outside and they can not be less than a thousand meters from a hotel with a casino.
However, they may be 100 meters or more from other businesses with slots, schools, churches and other religious centres according to local daily El Vocero. Despite the limit of machines per business, the new regulations state that wholesalers are able to operate between 100 and 250 slots under a single name in different locations.
According to the new rules “it is essential that these machines do not represent the only or the largest income of the commercial activity of the establishment, so to be considered as a business, it must have other commercial activities in order that the income generated by the machines are a complement and not the main source of income of that establishment.”
The regulation establishes that the prizes for players will have a limit of US$1,000. Slots will pay a 2 per cent tax on prizes to the Department of the Treasury after the first US$500.
The legalization of slot machines that operate outside casinos was included in recent tax reform laws. One of the most significant changes is that it places the supervision and management of these businesses in the hands of the PRTC and takes it out of the hands of the Department of the Treasury. The regulation establishes that the slot machines must operate with a tourism permit, meaning that the permits previously issued by the Treasury will probably have to be exchanged for new ones.
The wholesale owners of these machines must pay an annual license of US$1,500 for each machine, while the manufacturers and service providers for slots machines will pay a license fee of US$3,000 every two years. In addition, the regulation allows the imposition of fines from US$5,000 to US$10,000 for non compliance.
The plans however continue to come under fire from The Association of Hotels and Tourism of Puerto Rico (PRHTA) which has criticised the government over its plans to legalise slot machines outside of casinos. The PRHTA has criticised the absence of a serious and public evaluation of the proposal to legalise slot machines through public hearings and that the legalisation of slot machines would cause losses of revenue for the government and the casino industry.
In addition in August lawmaker Ángel Matos García described moves to legalise slot machines in the country as an “assassination attempt” on the local casino industry. García classified the proposal as unrealistic saying it would lead to job cuts.
The casino industry is already in decline. Revenues for the casinos on the island stand at around US$265m per year and they generate 3,000 direct jobs and 5,000 indirect jobs. Casino revenue is a vital source of funding for The PRTC as well as the biggest state university on the island.
