SLOTS IN PUERTO RICO
supposed to allocate a portion of GGR to certain public funds. 22 Another obstacle that the racetrack faces with the latest racino proposal —which would constitute a substantial expansion in slot machines compared to the trend over the last three years— is that horse race betting has rebounded substantially since the near collapse of the industry in 2017. 23 In that period, handle has grown considerably from almost $79,000,000 to approximately $157,000,000 in 2021, and $144,000,000 in 2022. 24 The most recent numbers were last seen in fiscal year 2012. 25 On the regulatory premise that slot machines in OTBL are a complement to horse racing, 26 the growth of the machines will be inextricably tied to the betting handle. The final hurdle is the fact that the racetrack owes millions to the Puerto Rico Administration of Mental Health and Anti-Addiction Services. 27 Although not directly tied to slot machines in OTBL, this horse racing debt could be used as an equitable defense against the racino proposal.
likely path to slot machine expansion is through OTBL maximizing the allotted regulatory caps per location. However, there could also be more casinos in the next years. This begs the question as to how many slot machines can legally be allowed in Puerto Rico before growth stalls. There is currently a lack of interest in approving more igaming after the government allowed sports betting and fantasy contests. This, along with demographic traits, favors the continued success of slot machines. The territory’s brain drain means that the population is dominated by retirees and pensioners. 28 This majority prefers to play traditional and retail games of chance like lotteries and slot machines. For them, is not just the games and their psychological effects, but the experience of getting out of their homes and meeting up with their contemporaries in safe spaces where they are treated well. These trends could also signal an investment opportunity and a wave of consolidation, akin to what has happened with distributed gaming in some US states. 29 As such, there’s a lot of interest in the unregulated slot route industry in Puerto Rico. Slot route machine locations and OTBL could present a similar opportunity for investment trusts and funds.
ERIC O. DE LA CRUZ IGLESIAS Senior Attorney, Puerto Rico Department of Economic Development and Commerce He may be contacted through his LinkedIn or IMGL profiles
Conclusion and industry forecast
The factors noted above indicate that the most
22 See Act 11-1933, Secc. 29 23 That year had a consecutive double whammy: the territory went into debt restructuring and then got destroyed during the hurricane season. Both events happened months apart during the summer. 24 See Audaz crecimiento de ganancias en apuestas de juegos de suerte y azar, May 21, 2023, https://www.primera- hora.com/noticias/gobierno-politica/notas/audaz-crecimiento-de-ganancias-en-apuestas-de- juegos-de-suerte-y- azar/. 25 See New Purse Structure Could Benefit Puerto Rico, September 3, 2021, https://www.bloodhorse.com/horse- rac- ing/articles/252728/new-purse-structure-could-benefit-puerto-rico. 26 See Regulation 7625, preamble. 27 See Millonario cantazo a ASSMCA, April 9, 2023, https://www.primerahora.com/noticias/gobierno- politica/no- tas/assmca-reclama-que-le-deben-mas-de-37-millones-para-ayudar-a-los-jugadores-compulsivos/. 28 See People are fleeing Puerto Rico, Guam and every other U.S. territory. What gives?, September 23, 2022; https://www.washingtonpost.com/business/2022/09/23/american-territories-population-loss/; Puerto Rico Tries to Woo Big Business Amid Widespread Challenges, March 20, 2023, https://www.bloomberg.com/news/articles/2023- 03-20/puerto-rico-makes-pitch-as-site-for-corporate-offices-and-factories. 29 See United Gaming Increases its Senior Secured Credit Facility to $820 Million; Closes on the Acquisition of Georgia’s Third Largest COAM Operator; And Strengthens C-Suite, April 21, 2023, https://www.prnewswire.com/ news-releases/united-gaming-increases-its-senior-secured-credit-facility-to-820- million-closes-on-the-acquisition- of-georgias-third-largest-coam-operator-and-strengthens-c-suite-301803501.html; Illinois companies now control the bulk of Nevada’s slot route industry, January 20, 2024, https://cdcgaming.com/brief/illinois-companies-now- control-the-bulk-of-nevadas-slot-route-industry/.
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IMGL MAGAZINE | APRIL 2024
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