PUERTO RICO
network of up to 25,000 machines will be connected through the operator’s interconnection systems. This will generate detailed data on the machine activity, offering transparency and facilitating better revenue tracking and distribution. Furthermore, once the machines are connected to the interconnection system, real-time monitoring of each machine’s activity, including financial transactions, will be possible. This will improve accountability and streamline the collections of taxes and revenues. With this feature, both operators and regulators will have access to accurate data, ensuring compliance. The route machine market is poised to generate significant revenue once the regulations are operational and the transition period is complete. After the first 25,000 machines are installed and comply with the new technical standards, a large portion of revenue will be generated for public benefit. Under Act No. 11, the revenue is defined as the amount wagered minus the prizes paid by each machine. The Commission will allocate 22.5 percent of the total revenue to various public purposes stated in Act No.11. The remaining 77.5 percent will be divided equally between the operators and business owners after deducting internal operations costs, including those associated with connecting machines to the approved interconnection systems. Additionally, the first US$12 million in revenue generated from licensing of the slot machines will go to the Treasury of the Government of Puerto Rico. The 22.5 percent allocated by the Commission will be used for social welfare initiatives and to fund the Commission’s operational cost in overseeing the industry. One such initiative includes funding the Police Retirement Fund, which will receive 55 percent of the revenue, ensuring adequate resources for officer’s retirement. Additionally, 40 percent of the revenue collected by the Commission will be allocated to the Treasury to support local municipalities in providing essential services.
The remaining five percent will be used to cover the operational expenses of the Commission for regulating and overseeing the industry. To illustrate this, we must consider two revenue scenarios. The first scenario is a conservative projection of US$37 in daily revenue per machine, while the second scenario is based on a projection of US$56 daily revenue per machine. The second projection uses data from the Commission’s annual report on the “Sistema de Video Juegos” (slot machines in off-track betting location) for 2023. 6 In the first projection, with a daily income of US$37 per machine, the annual revenue would be approximately US$337 million. On this amount, 22.5 percent would be approximately US$75 million. In this case, the Commission, would be required to allocate approximately US$41 million to the Police Retirement Fund, around US$30 million to the municipalities, leaving US$3.75 million for the Commission’s operational expenses. In the second projection, with a daily income of US$56 per machine, the annual revenue would be approximately US$511 million. The Commission would allocate 22.5 percent of that amount, or about US$115 million. Under this scenario, approximately US$63 million would go to the Police Retirement Fund, around $46 million to the municipalities, and US$5 million for the operational expenses of the Commission. As demonstrated, the market has the potential to generate significant revenue to worthy causes such as the Police Retirement fund and supporting municipalities in providing essential services to the people of Puerto Rico. Also, the full implementation of Act No. 11 and its regulations, will help combat the proliferation of illegal machines. Once the process is complete, unauthorized devices will be more easily identified, reducing illegal gambling, improving market integrity, ensuring fair competition for legitimate operators,
6 In the 2023 annual report of the “Sistema de Video Juegos” to the Senate, the Commission reported an approximate daily revenue of $56 per machine
PAGE 40
IMGL MAGAZINE | DECEMBER 2024
Made with FlippingBook flipbook maker