Puerto Rico Bills Would Legalize Sports Betting

The governor of Puerto Rico, Ricardo Rosello (l.), has approved of allowing as many as 50,000 slot machines that now operate outside of casinos in the shadows to become legal. The hope is that additional slot machine taxes will help the bankrupt island government add revenue.

Puerto Rico’s House and Senate and Governor Ricardo Rosello signed a controversial bill last week that allows slot machines outside of casinos.

This legalizes what have up until now been underground gambling operations. It has been estimated that as many as 50,000 video lottery machines operate in the commonwealth—many of them in bars, markets and gas stations. Once operating within the law, they could provide an estimated $100 million in taxes, according to some estimates.

But even before this legislation, the commonwealth’s casino industry was in distress. With higher taxes and more gaming choices, many Puerto Rican casinos have already closed. This legislation should put the final nail in the coffin of the mainstream casino industry, which have been hurt by the proliferation of illegal slot machines across the country.

The bill was part of an overhaul of taxation on the island and help the government deal with its recent bankruptcy. It includes a provision lowering the corporate taxation rate, something that is expected to increase annual revenues by up to $400 million.

The commonwealth’s Financial Oversight & Management Board warned that the island’s casinos would be harmed by the competition and that this would affect the government’s revenues since their profits are taxed.

However, the federal oversight board, which the U.S. Congress created to oversee the island’s fiscal turnaround after bankruptcy, said there was no evidence that the VLT proposal (now law) wouldn’t harm other sources of revenue. The casino industry is considered an important part of the tourist economy.

Senator Javier Ríos Santiago told a reporter during a phone interview: “These machines already exist and compete with our casinos.”

Governor Rosello said he was “satisfied” with the bill and added, “should any obstacles come up we’ll have to fix them fast.”