Puerto Rico Gambling Legislation Advances, Seeks Revenue to Fill Fiscal Hole

Posted on: October 26, 2022, 10:40h. 

Last updated on: October 26, 2022, 11:23h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Puerto Rico has faced a number of financial difficulties in recent years. Now, as it struggles to find economic stability, a new era of gaming could be coming to ease the strain.

Puerto Rico Hurricane Fiona
Puerto Ricans collect donated supplies in the wake of Hurricane Fiona. The US territory will update its gaming laws in an effort to find greater fiscal autonomy in the wake of repeated economic troubles. (Image: Associated Press)

The House approved legislation yesterday that seeks to amend various sections of Puerto Rico’s “Law of Gaming Machines.” The goal is to raise more funds for the Treasury, as well as to subsidize a number of government projects that have faced cuts.

House lawmakers addressed the bill during their normal session, finally voting on it on Tuesday night. It found overwhelming support, with 33 votes in favor and just 10 against.

More Gaming, More Fees

The legislative piece, whose authors are Representatives José Rivera Madera and Orlando Aponte Rosario, establishes a new amount for the fees payable for certain gaming licenses. It will also create new scales for the acquisition of licenses and vary the distribution of revenue from the industry.

The project will increase treasury funds in the midst of the economic crisis caused by the COVID-19 pandemic. The situation was additionally impacted by several hurricanes that tore through the island in the past few years.

The proposed amendments guarantee that Puerto Rico’s small- and medium-sized enterprises (SME) can continue to offer entertainment without unfair competition. The legislation also specifically allows for the allocation of a percentage of the revenue to civil service. In this regard, from each license paid, the Gaming Commission will retain $175 for its operating expenses. Another $75 will go to the Puerto Rico Police Retirement (PRPR) compensation.

The amount for land-based gaming machine licenses is $1,500, and in accordance with the provisions of Section 8 of the law, the PRPR will receive $450 of the total. The commission will keep the rest for operating expenses.

Likewise, the legislation authorizes the use of gaming machines in government-approved businesses. In turn, it validates a maximum of 25K land-based gaming machines in the US territory during the first two years of this law’s validity. That can then increase to 35K and, with approval, possibly 45K.

The cost of each new license or renewal of gaming machines will be $250 per year. The maximum number of gaming machines allowed per business will be 10, with a huge caveat. Each screen counts as one gaming machine, despite the fact that the same gaming machine has multiple screens.

Long Road to Recovery

Five years ago, Hurricane Maria slammed into Puerto Rico, devastating the island. Extended power outages and lack of fresh water plagued different parts of the territory for more than a year. That was a year after the territory reported $72 billion in debt and $55 billion in pension liabilities it couldn’t cover.

The US government stepped in, ready to bail out the government. However, COVID-19 arrived, impacting tourism and local business, and forcing policy changes.

Eventually, the financial assistance began to pay off. However, just as Puerto Rico was starting to emerge and recover from that, Hurricane Fiona hit last month. Once again, power outages and water shortages arrived.

Today, 10% of the people are still without power, and 5% don’t have fresh water, according to Federal Emergency Management Agency.

Although the US government has once again promised to provide financial support, it doesn’t go very far. The Financial Oversight and Management Board only allows Puerto Rico to draw up to $1.15 billion a year. As such, and with the continued blows to the economy, it needs to find a way to offset the remaining fiscal shortcomings.