Sunday, August 20, 2017

Puerto Rico Legislature approves raising gaming machine license fees

By on August 10, 2017

SAN JUAN — With 23 votes in favor and seven against, House Bill 1142 was approved in the Senate after both legislative chambers reached an agreement in conference committee on the proposed amendments.

The bill seeks to amend Section 3050.02 of Act 1 of 2011, known as the “Internal Revenue Code for a New Puerto Rico,” for the purpose of establishing the payment of license fees for coin-operated machines as of July 1 of 2017. The amendments would increase the annual license fee for these machines from $100 to $300.

In addition, the measure imposes a payment of $3,000 for each electronic gaming machines operated with coins or tokens when the skill or abilities of the player significantly affect the final result of the game. With this measure the government expects to raise $69 million in the new revenue in its $9.56 billion budget.

(Juan Rodríguez / CB)

The bill was sent to the House, where it was also approved with 27 votes in favor and 12 against.

However, Popular Democratic Party (PDP) Sen. José Luis Dalmau warned of what he called a nefarious blow to small businesses on the island.

“These types of bills come to establish a public policy that is not related to the reality of the businesses that have this type of machines in the country,” the senator said during his initial turn on the floor. “This type of machine has its regulations, it pays its fees in the [Department of] Treasury but they are still criticized by the sectors that compete against them and by sectors that want them all eliminated to bring machines from abroad. The so-called video-lottery coming from Las Vegas,” the PDP senator said.

“There is a case in…court, which has not been resolved, to determine whether the Department of the Treasury acted correctly or incorrectly regarding the regulations to encourage this type of gambling,” he added.

Dalmau said groups representing small business went several times to the legislature to say they are willing to pay more taxes for these machines, but not as much as they will owe now to not put their businesses at risk.

He also questioned the Treasury’s math with respect to the expected revenue from this measure.

“No one in the government knows how these machines operate. If Treasury were asked how many machines they have registered, they do not know,” he said. “There are those who say that there are 20,000, others who say there are 30,000. There are those who say there are more illegal than legal ones.”

“So how is this bill brought and is said to raise $69 million? Where does the information come from if the Department of the Treasury itself does not know how many machines are registered,” the senator questioned.

He also criticized that the due process of public hearings had not been carried out to obtain all the data and input from the owners.

“We see an attempt of this bill to benefit those who come from outside, those who want to put their machines here in Puerto Rico with promises of multi-million-dollar amounts that do not reflect the reality of what is established here. Whether for or against the gaming, the reality is the bill should have contained information for one to judiciously approve it,” he said.

The senator recalled that in 2011 Act 77, which sought to establish a $2,500 fee on this type of machines, was approved. However, by its own admission, Treasury did not see the expected revenue since these were not considered adult entertainment machines but video game machines.

If the bill is enacted, it will also raise fees for jukeboxes, pool tables and others, to amounts that are not proportional, he said, to the money they produce.

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