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Puerto Rico’s New Tax Regime Plans Halted by Regulatory Issues

Puerto Rico’s plans to introduce a new tax regime on slot machines are now on hold. This was after questions tearing into the licensing process emerged. The jurisdiction is yet to establish a gaming commission and this is putting the industry in constant change.

Several Rules Fail to Take Effect in Puerto Rico’s Gaming Industry

Puerto Rico has had multiple attempts at introducing several regulations to the gaming industry. The regulations aim at providing the industry with a more mature outlook. One of these regulations includes 2020’s Regulation 9174. This was on the Operational Inspection and Interconnection of Gambling Machines on the Road. 

The other rule is Regulation 9175 on the Issuance, Management, and Inspection of Licenses. Both rules hit a wall after a judge cut them off. Electronic Games Inc. took to court in a lawsuit regarding the new rules. The game developer argued the proposed rules were unconstitutional.

Electronic Games also said Compañia de Turismo overstepped its mandate when it put these regulations in place. The body is a state tourism authority tasked with regulating slot machines but until 2019.  

Now Puerto Rico faces a new challenge after the Gaming Commission tasked with taking over from the Compañia de Turismo came under fire. The Commission’s framework is still up for discussion in a legal battle. This pumped the brakes on specifying the tax structures and obligations. 

Puerto Rico’s New Tax Regime Plans Halted by Regulatory Issues

Frustrated Executive Director Unhappy with the Recent Events

The Gaming Commission’s to-be executive director expressed dissatisfaction over the recent events. Orlando Rivera stated the legal issues are a hindrance to Puerto Rico’s planned economic recovery. Rivera argued this stall could deny the government much-needed license fees going to an excess of $30 million per year. 

Rivera added to their frustrations of the much they’ve done since January to this point could go down the drain. This will be due to the potential revocation of all granted licenses. That means going back to square one to initiate a new licensing process. 

The tax scheme provides for a 67% share for operators. The government would then take the remaining 33%. Police retirement funds would get 50% of the government’s stake. Another 45% would go to municipal governments. The Gaming Commission would get the remaining 5%. 

Rivera states the losses could be significant. At least 80,000 unregulated gaming machines and 3,100 operators were in the market before the Commission attempted to implement the new gambling rules in Puerto Rico. Currently, 101 licensees are available, offering up to 250 slots. At least 25,000 slot machines are available in the jurisdiction. 

Things stand in limbo after the whole gaming framework was put to the test. Rivera said they will go to the Appellate Court should the current court decision remain in place. 

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Nerijus Grenda
Nerijus Grenda
Published: 10 Aug 2021
Updated: 13 Mar 2023
Nerijus Grenda is a prolific contributor to the GoodLuckMate site. With a deep understanding of the online casino industry, gained from his own experience as an avid player, he offers valuable insights on what sets the best casinos apart from the rest. As a writer, Nerijus shares his expertise through expert analysis and thoughtful commentary on various topics related to online gambling, including casino reviews, game guides and industry trends.

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