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Latino America
As February is carnival time in Latin America, we just had to escape to this beautiful region. It’s true, really, whichever way you look at it, from Mexico to Tierra del Fuego, Latin America is just gorgeous, and the gaming industry just now, as exciting as ever.
Exciting is perhaps the wrong word, but it is an industry that moves like a salsa dancer. You see, while new legislation enables casinos to open in Guyana and Chile, there are some horror stories coming out of Venezuela, and in Peru, well, with a new gaming law amendment, the sorry saga carries on.
While in Lima, we received a call to travel to Korea and Cambodia to help a couple of clients in their gaming operations, and while over there, we were very pleased to see that Boss Gaming has sold some of their splendid electronic roulettes in Viet Nam and Cambodia. And what has this to do with Latin America, you may ask yourselves? The answer is quite simple. Boss president Linda Monzon is from Nicaragua and they have just opened an assembly line in Bogotá, Colombia!
As we closed this edition, some guys were getting ready to travel to Quito for Fadja’s one day Business Round, while we were enjoying a few more days of glorious Peruvian Pisco Sour, ceviche and a few Cuzqueñas, before traveling to Colombia and Mexico to see first-hand some important events and operations in the gaming industry, and keeping well away from the freezing English winter.
Cheers,
Ricki.
MEXICAN SENATORS FAVOUR CASINO LEGISLATION
In a press conference in mid-February, a senator from the PRD party (Partido de la Revolucion Democratica) explained why the law prohibiting casinos in Mexico had come into being. David Jimenez said that over 50 years ago, when the law was passed, it had been intended to keep out the Mafia and professional gamblers. There is now a different climate and casinos could be approved under adequate regulations.
At the same press conference Senator Lazaro Mazon Alonso, also with the PRD, maintained that the prohibition on casinos had not prevented those with no regard for the law from opening many clandestine casinos across the nation. He stressed that annually millions of tax dollars were being lost to the country, and for that reason legislators had backed three initiatives since 1999 to formulate a new gambling and betting law that would include the installation of casinos in Mexico.
The PRD senators indicated that licensing casinos would generate investment of over US$36 billion in Mexico, and some US$800 million in taxes. Apart from this, other sectors would also see increased investment, such as hotels, customs and the general tourist industry. It is to be hoped that any Mexican gambling law would ensure a level playing field for prospective investors, and not be mired in a similar controversy to that produced by the betting licences authorized by Santiago Creel of the PRD.
NEW CASINO LAW FOR GUYANA
Assurances have been given by the government of Guyana that sufficient measures are in place to address the social challenges that casino gaming could bring. Suggestions of an increase in money laundering, gambling addiction and prostitution were countered by the government, which pointed out that other businesses were equally liable to be used for money laundering, that tourism brought prostitution, and that there was no empirical evidence that casino gambling would be any different from the controlled forms of gambling already existing in Guyana.
The Gambling Protection and Amendment Bill 2006 passed in mid-January include several clauses aimed at monitoring and addressing gambling activity. It also restricts the granting of casino licences, which will be allocated by the Home Affairs Ministry after a consultative process. The government believes that after studying the experiences of over 100 countries that regulate casino gaming it has sufficient knowledge to effectively monitor the gaming sector, and that amending the present legislation should not lead to a higher incidence of misconduct.
President Bharret Jagdeo is keen to have casino licensing in place before the Cricket World Cup brings additional tourists to watch the games being played at the stadium in Georgetown. Buddy’s International Hotel & Resort was under construction when the Bill as passed, with a US $10 million investment; it is anticipated that the first casino licence will be allocated to this property in Georgetown, the country’s capital.
IGGR US$60M TO CREATE 5000 JOBS IN CHILE
French operators International Group of Gaming & Resorts (IGGR) has been awarded a casino licence for Chile’s most promising destination, some 50 kilometres from the capital Santiago, south of the Pan American Highway. The Paihuen Casino & Resort project will change the face and future of the small district of Mostazal. Up to now, the sleepy commune of San Francisco de Mostazal has been know for its relatively young wine industry, where the Mostazal blend started yielding barely 10 years ago.
Whether the regional wine tempted the French group to gamble on a project for Mostazal is a matter for conjecture. Against major competition for projects in the region’s capital Rancagua, from Chile’s leading casino operators Enjoy and from Ibero-American giant Cirsa, the fact remains that IGGR CEO Francis Raineau fought a clever battle on all fronts, from insisting on a fully regional regeneration of the economic infrastructure to the lasting creation of more than 5000 jobs.
The Paihuen Casino & Resort project, with a US$60 million budget, aims to set up a gaming operation with 1500 gaming devices, a select 70-room 5-star hotel, disco, restaurants, three convention centres, a commercial centre, a food court with dozens of eateries, a gym, an internal transport system, and an interactive and theme park. The entertainment side of the project will be complemented by communal services that include local arts and craft gallery, sports facilities and other attractions.
As with anything in gaming licensing these days, there has been highly-charged questioning on licensing a casino, from opting for favouring a project away from the region’s capital city Rancagua right down to blaming the mayor for permitting provincial alliances. In this last instance, IGGR has been accused of offering a percentage of its profits to the region’s communities, excluding Rancagua.
As it is, neither Cirsa nor Enjoy seem to have disputed IGGR’s choice, and the French group will start to increase its presence in Latin America after successful operations in Curacao, Argentina and Ecuador. Starting in France in 1977, the company operates three casinos at home as well as three others in Egypt, including the Sinai Grand Casino, a Las Vegas-style destination casino and the first of its kind in Egypt, situated in Sharm El Sheikh on the Red Sea Riviera. IGGR lists revenues for 2005 at US$165 millions.
600 SLOTS ROOMS COULD BE
CLOSED IN PERU
Towards the end of February, Foreign Trade and Tourism (MINCETUR) minister Mercedes Araoz said that as part of the Peruvian government’s zero tolerance level to illegal gaming operations in the country, they would close any operation which does not comply with current licensing laws. According to the latest piece of Peruvian gaming legislation, more than 900 slots parlours have until March 24 to toe the line or risk being shut down.
Minister Araoz reminded operators that licences issued by municipal and local governments do not comply with the law, which states that all licensing must be authorized by MINCETUR, adding: “The law passed in December 2006 is very clear regarding the legal distance for locating slot parlours, as well as licensing, which cannot be granted by a municipality unless it is authorized by the Ministry”.
According to the new law, when the process for formal licensing of hundreds of operations ends, all those slots operations without due authorization by MINCETUR will be closed. It is estimated that some 600 slots operations are likely to be closed when the time comes. However, MINCETUR has opened additional offices to expedite processing as many slots operating companies that wish to comply with the law, and publish detailed information in the regulator’s website.
PROPOSAL TO ELIMINATE BINGOS AND CASINOS
Just six weeks following his re-election as President of Venezuela, Hugo Chávez has announced during the broadcasting of his radio programme ‘Hello President’ that his new government will take the “necessary measures to eliminate areas of prostitution, the sale of drugs, and casinos and bingos which are frequented by the upper classes.” To say that these declarations are alarming is evidenced by the reaction in the press.
Such verbal attacks on the middle and upper echelons of Venezuelan society have given President Chávez firm support amongst the poor and gained him his re-election. However, this unprecedented attack on the most productive sector in the country has every appearance of becoming a fight of attrition between the middle classes and the administration.
The elimination of bingos and casinos, however, had not previously been heard. While it is necessary that the National Assembly resolves the question of taxation on gambling revenue, the measures mentioned by Chávez could be those of implementing astronomical rates of taxation as already proposed by one legislator, Hiroshima Bravo.
In August 2006 Bravo suggested that each slot machine should carry between 150 and 250 tax units, around US$1,890 to US$3,150. Under this plan the daily tax payable on each machine could be over US$100. If this is one of the measures that President Chávez decides to adopt, it will have the effect of a bomb exploding in the Venezuelan gaming industry.
THE NINTH EDITION OF FADJA
The Andean gaming market is undergoing constant and rapid expansion, and over the years this has led to Colombian gaming industry exhibition FADJA keeping to optimum business levels. Organizers 3A Producciones has managed to consistently produce an effective, commercial show that covers the economic Andean Community countries, which include recently-rejoined Chile, as well as Bolivia, Colombia, Ecuador, Peru and Venezuela.
Colombia has a thriving gaming industry and sales offices by most prestigious manufacturers are being opened in the country. Many prominent brands in the gaming sector have a presence in Colombia, and the Andean Fair of Games of Chance (FADJA) has grown by around 30% annually, and in
its 9th edition remains committed to answering to the expectations of exhibitors and visitors alike by delivering excellent sales figures in a representative event for the industry.
Gaming institutions will be out in force at FADJA 2007. These include government organizations such as the Tourism Ministries in Venezuela and Ecuador as well as Colombia’s Ministry of Social Protection. Latin American casino federations such as Argentina’s ALAJA, Ecuador’s ASCABI, Venezuela’s CABEVIN and Colombia’s FEDELCO, FECEAZAR, FECOLJUEGOS and ECOJUEGOS will also make presentations at the show.
FADJA 2007 takes place on 11 and 12 April in Bogota, which feature an additional pavilion dedicated to the Argentinean gaming industry. There are other novelties
being prepared and FADJA will announce its new corporate image for its 10th Anniversary in 2008. Jose Anibal Aguirre, event organizer, commented, “Personalized attention, online registration, access to free wireless Internet and processing
of certification will allow us to continue raising our standard of quality and present the best gaming industry show in the region.”
