SLOTS IN PUERTO RICO
industry which was struggling with a 20-year decline in the popularity of horse race betting. With this justification, the amendment reduced the government’s take from horse race betting, 12 eliminated taxes on horse owners’ income from races, and doubled the cap on the number of slot machines permitted from 2,500 —as established in Regulation 7625— to 5,000. Almost 2 years later —in November 2016— Regulation 8859 replaced 7625. It raised from 30 to 50 the number of super OTBL, which can now have up to 30 machines —up from 20 in the previous regulation. 13 Machines may be played whenever there are local and simulcast races — in effect this means almost every day. Although the minimum hours of operation were kept the same, there is now no limitation on the maximum hours of machine operations on a race day. Prizes up to US$1,000 —up from US$500— can now be redeemed at the OTBL. OTBL slot machine numbers, comparisons and racino analysis The number of OTBL (taken as a monthly average) increased from 394 in 2021 to 410 in 2023. The number of slot machines followed a different curve: 3,018 in 2021; 3,263 in 2022; and 3,241 in 2023. During this 3-year period, the average handle per machine was US$88,765, and average GGR was US$20,720. 14 For comparison, during the same 3-year period, casinos in Puerto Rico grew from 16 to 20 along with machine numbers: 4,669 in 2021 to 5,336 in 2023. During this 3-year period, the average handle per machine was US$520,455, and average GGR was US$73,949. 15
There are still almost 1,700 fewer machines in OTBL than the 5,000 cap that HRISA established in December 2014. Although El Comandante and Codere’s original proposals are now 20 years old, the idea of a racino still persists. The most recent iteration consists of 200 machines in the racetrack 16 — down from the 500 that Codere requested. The casino industry traditionally views a racino as a threat to its business model. 17 Their reasoning — in public at least — seems to be that allowing slot machines in the racetrack —which now has sports betting kiosks but not the card and traditional games of chance only allowed in casinos— will attract the tourists that the Games of Chance and Gambling Devices in Casinos Authorization Act (‘Act 221-1948’) is supposed to funnel towards the hotels with casinos. 18 In reality, however, gaming trends reveal that slot machines are played mostly by locals. This is exemplified by the unregulated slot route industry, 19 which is estimated to be the biggest gaming vertical in Puerto Rico. A better argument for the casino industry is the big difference between the government’s take from slot machine verticals. During the 3-year period between 2021 and 2023, the Puerto Rico Gaming Commission (‘PRGC’) took an annual average of $31,855,555 as operational costs for regulating slot machines in casinos. Many government funds detailed in Act 221-1948 took an annual average of $166,867,722. 20 By contrast, during the same period, the PRGC took an annual average of just $221,367 as operational costs for regulating slot machines in OTBL. 21 Even slot route operations are
12 See Aprobada la nueva Ley Hípica, November 19, 2014, https://www.primerahora.com/deportes/hipica/notas/aprobada-la-nueva-ley-hipica/. 13 Regulation 8859, Secc. 3.4 14 See annual reports to the legislative assembly for the implementation of the OTBL machines. https://senado.pr.gov/index.cfm?module=agen- cy-reports 15 See semester reports for slot machines in Puerto Rico’s casinos, https://senado.pr.gov/index.cfm?module=agency- reports 16 See P. de la C. 1983 from January 12, 2024. 17 See Puerto Rico Senate Diaries; Tuesday, November 14, 2006; pages 28119, 28133-28134; A jugar maquinitas en el hipódromo, May 23, 2013, https://www.primerahora.com/noticias/puerto-rico/notas/a-jugar-maquinitas-en-el- hipodromo/. 18 See Act 221-1948, Secc. 1 19 Though not properly regulated during most attempts to do so since 1997, the slot route industry is officially unregulated since December 2022. See Act 104-2022, and Act 42-2024. 20 See semester reports for slot machines in Puerto Rico’s casinos, https://senado.pr.gov/index.cfm?module=agency- reports; Act 221-1948, Secc. 5. 21 See annual reports to the legislative assembly for the implementation of the OTBL machines. https://senado.pr.gov/index.cfm?module=agen- cy-reports.
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IMGL MAGAZINE | APRIL 2024
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