The measure includes the legalization of 45,000 slot machines over the next three years. (semisquare-x3)
The measure includes the legalization of 45,000 slot machines over the next three years. (GFR Media)

-The Secretary of Economic Development and Commerce, Manuel Laboy, warned yesterday that the legalization of slot machines outside casinos, approved by the House as part of the tax reform, will have a "dire" effect on the tourism industry and, therefore, in the revenues of the government.

The measure includes the legalization of 45,000 slot machines over the next three years, with the alleged intention of bringing new revenues to the Treasury, a matter that has provoked intense opposition from the Puerto Rican hotel sector, as they understand that these machines would directly compete with those in the Casinos

"This would be disastrous for the revenues received by the government of Puerto Rico for gambling and casinos ... We cannot favor something that threatens tourism," said Laboy at a press conference in San Juan.

But then, in written statements, the official indicated that he favors other contributory changes contained in the reform, such as work credit and reductions in the B2B tax and the purchase of prepared food.

The official warning was that the decline in government revenue would respond to a decrease in casino gambling and in tourism in general. According to Laboy, this implies that not only the central government would receive less revenue from tourism, but would that it would also affect the budgets of entities such as the Tourism Company and the University of Puerto Rico, which receives income from gambling.

"We will work as a team so that any measure that implements the regulation of the slot machines does not affect tourism and contributes to economic development because we understand the concern of the tourism sector," said Laboy.

Governor Ricardo Rosselló Nevares commented in a few brief statements that he had not finished reading the part of the bill on the issue of slot machines, but was confident that they would reach a version that would harmonize the legalization of slot machines with the interests of the casinos and the tourism sector.

"My consideration was that anything regarding gambling has to be regulated and evaluated with all the actors, and the hotel industry is one of them," the Governor said.

No money for gambling addiction

The possible legalization of slot machines outside casinos occurs at times when the Compulsive Gamblers Assistance Program does not receive funds on regular basis to operate.

A report by the Mental Health and Anti-Adiction Services Administration (ASSMCA Spanish acronym) highlights that, by last September, the Traditional Lottery owed the program $ 1.7 million, the Horse Racing Industry owed another $ 1.5 million and the Electronic Lottery, about $ 250,000. In total, the obligations of these entities with the program add up to about $ 3.5 million.

"ASSMCA has made the collection procedures to each of the agencies that make contributions," said Javier Toro, director of the preventive program.

"If funds do not enter, ASSMCA cannot fulfill the responsibility of operating and administering the Compulsive Gamblers Assistance Program. In order to operate and expand the services and make them accessible in different regions, it is necessary to receive each agency´s contributions at the beginning of each fiscal year," he warned.

Similarly, receiving the contributions would allow updating the prevalence estimates on pathological gambling on the island. The only study in Puerto Rico on that matter dates back to 1998, Toro said during a public hearing of the Senate Finance Committee, which analyzes Senate Resolution 674 on compliance with the statute.

"If the slot machines are legalized (outside casinos) ... it can certainly worsen gambling addiction because it will increase access to the game, and games will be in businesses that do not have the regulations that a casino has," said Popular senator José Nadal Power, who considered it necessary to amend the "Compulsive Gamblers Assistance Program Law " (Law 74-2006), which provides for the contributions.

Members of the Legislative Assembly, both from the Popular Democratic Party (PDP) minority as well as from the New Progressive Party (PNP), voted against the tax reform bill because of the effect it could have on levels of gambling addiction, including slot machines.

Data provided by ASSMCA suggest that about 9,000 people in Puerto Rico may be suffering from addiction to games, but only 2 percent seek professional help.

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