Costa Rica Announces Extra Tax On Casinos
The Costa Rican government has confirmed
plans to create a new gaming authority under
forthcoming legislation that will also
subject all gaming companies – online and
offline – to tighter licensing and taxation
requirements, the country’s finance
minister, Guillermo Zuñiga has announced.
The government’s plans to address Costa
Rica’s worsening fiscal situation include
tighter regulatory control over gambling and
an extra 2 percent tax on the gross revenues
of all gaming operators established in the
country, the finance minister
announced on Monday.
Speaking at a press conference in San José,
Zuñiga stated that the government would
introduce a new gaming bill for discussion
in the country’s parliament, perhaps as
early as this August.
Zuñiga said the 2 percent gaming tax on
gross gaming revenues would allow the
government to generate US$85 million per
year in new revenues. The proposal comes as
Costa Rica attempts to address a fiscal
situation that has seen government revenues
drop eight percent during the first-half of
the year, with expenditure rising by more
than 20 percent. Projected GDP growth for
the year has also been lowered by the
country’s central bank. Under the fiscal
plans, the government will also introduce
US$112m worth of public spending cuts.
The finance minister said the gambling bill
would include steps to establish a new
gaming regulator under the control of
various government departments. The
regulatory body would be charged with
issuing licences to gaming companies and
ensuring their compliance with legislation.
The new regime will apply equally to online
betting operators, and the country’s 35
terrestrial casinos, according to local
newspaper reports.
Zuñiga refuted any notion that Costa Rica’s
move to tax and regulate gaming was related
to the country’s inclusion alongside
Uruguay, Malaysia and the Philippines on a
list of countries that failed to meet
international tax standards that was
published by the Paris-based Organisation
for Economic Co-operation and Development
(OECD) in April 2009. Zuñiga this week
described the Costa Rican government’s
gambling plans as falling within a “global
tendency” to regulate gambling activities.
Costa Rican casinos were made subject to
more stringent licensing requirements just
last year. However, an April 2009 report
from global anti-money laundering (AML)
watchdogs the Financial Action Task Force (FATF)
criticisd the Costa Rican government over a
failure to apply more effective AML controls
to its gaming sector.
The report said such protocols “appear to be
lacking in Costa Rica, El Salvador and
Nicaragua despite recent attempts by their
respective governments to better control and
regulate the industries”.
Costa Rica has also played a central, if
controversial, role in the development of
the global online gaming sector. A number of
the most prominent names in the remote
gambling industry have at one time or
another installed offices or call-centres in
the Central American country, despite the
fact that the activity has never been
formally regulated under Costa Rica’s
gambling laws.
There are currently around 250 internet
gaming firms registered in Costa Rica,
according to the US State Department. At
present, these companies are not subject to
either gaming taxes or specific licensing
fees, although they are forbidden from
accepting bets from Costa Rican residents.
Several previous attempts have been made to
establish tighter controls over online
gaming in Costa Rica.
A temporary law passed in 2003 required all
internet gambling companies to be formally
registered with the government’s finance
ministry, while several other bills proposed
by politicians to impose stricter
regulations on Costa Rica-based operators
have stalled in the country’s legislative
assembly.
Zuñiga said he was confident that the
government’s latest initiative would receive
parliamentary backing, though he
acknowledged that the government had yet to
sound out its Libertarian Movement coalition
partners over the gambling plans.
Costa Rica’s stock as an online gaming
jurisdiction has fallen significantly since
the United States’ clampdown on US-facing
gaming websites that has encompassed both
the 2006 passage of the Unlawful Internet
Gambling Enforcement Act (UIGEA) and the
collapse of Costa Rica-based and
London-listed operator BetonSports just a
few months later.
BetonSports’ former-chief executive David
Carruthers has now pleaded guilty to
violations of US gambling law following his
2006 arrest in Dallas in transit between
London and his home in Costa Rica, while the
company’s founder, Gary Kaplan, is due to
stand trial in before a federal court in
Missouri later this year.
A number of gaming companies, such as
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have also moved their principal operations
away from offices in Costa Rica as they have
withdrawn from the US market and have come
to favour bases with closer links to the
online gaming industry’s core markets in
Europe and, in particular, the UK.
How Costa Rica’s new rules will be applied
to those internet gaming firms still based
in the country is not yet clear. According
to local media reports, they could see the
Costa Rican government mimic tougher
restrictions that have been put in place in
Antigua & Barbuda in recent years. Antigua
was admitted to the UK government’s ‘white
list’ of approved online gaming
jurisdictions in November 2008.
Representatives from Costa Rica’s land-based
sector are said to broadly welcome the plans
to impose stricter licensing and regulatory
controls on gambling businesses. However, a
spokesman from the Costa Rican Casino
Association questioned the wisdom of hitting
casinos with higher tax burdens when
casinos, too, were suffering as a result of
the country’s economic difficulties. The
government’s plans to limit casino opening
hours were shelved earlier this year on
operators’ concerns. |
