Slot Machine Income Changes in Puerto Rico
Author:
Muhammad Gregory
The territory of Puerto Rico has approved a change in income distributed from slot machines. The income is specifically to do with slot machine licenses, rather than revenue generated from the use of machines by players. License fees will increase thanks to this new plan, with the idea of directing the money towards retired police officers in need of support.
Puerto Rico has updated its gaming law with a change to slot machine license fees. Carl Raw/Unsplash
New ways of distributing income from Puerto Rican slots
Puerto Rico’s Governor Pedro Pierluisi Urrutia has signed House Bill 1119 into law this week, officially putting a change in slot machine license revenue into effect. HB 1119 therefore has officially updated 1933’s Gaming Machines Law. It does so by earmarking funds from slot machine license fees towards retirement support for Puerto Rico’s former police officers.
Work on the bill has been ongoing, with an official endorsement in the Senate in June 2022. By October, the bill had made its way to the House, which also gave its approval. Governor Pierluisi stated how important he found the matter and that supporting retired police officers is essential. Pierluisi said that officers deserve Puerto Rico’s support in exchange for the daily risk they take to keep others safe.
As is the norm in many regulated countries or territories, in order to operate a slot machine legally, one must have an official license. These licenses are received through an application process with the government’s regulatory agency and involve, at the least, paying for the right to operate the machine.
The license is granted when the agency determines the operator has the right conditions for their slot machine: the machine must be up to standard, the location must abide by any local and federal rules regarding distances from schools, and the operator must agree to pay their share of tax and any other agreed-upon fees.
In Puerto Rico, these licenses are distributed by the Gaming Commission. They must then be connected to the operator’s Internal Connection System so that the machine can also be easily tracked. There are various such systems available, which also came into play in terms of the new bill.
Part of the bill determined that licenses will increase in cost by $250 USD. In terms of the Internal Connection System, a longer deadline has been given for operators to connect their machines. First the Gaming Commission has to certify system providers. Then wholesale machine owners will get to choose the system they believe is best. One year after this is determined, all machine operators must connect to the available system.
If slot machine operators do not abide by this rule and avoid connecting to a system for monitoring efforts, they will be forced to pay an additional fee. This will amount to $1,500 USD per machine that is operating without an adequate connection.
The distribution of slot machine income — beyond set fees — was also outlined in HB 1119. 22.5% will go to the Gaming Commission. The remaining amount will be shared between the business owner and the wholesale machine owner. That means the business remains relatively lucrative and advantageous to slot machine owners overall.
Of the percentage allocated to the Gaming Commission, 60% is now earmarked for police officer retirement funds. 35% will go towards municipal engineering projects. 5% remains with the Gaming Commission for administrative costs.
Puerto Rico’s governor approved the bill though the territory’s Fiscal Oversight Board urged him to reject it. They recommended against it because they did not think the Gaming Commission provided enough information about how it will continue operating with such reduced income. Furthermore, income for the General Fund is reduced by $40 million USD now.
Money will also be diverted from health investments towards the engineering works. The income usually given to the General Fund is also counted within Puerto Rico’s Certified Fiscal Plan. Despite the many changes that would affect the territory’s finances, HB 1119 did not provide much information about the consequences of these changes.
This is not the first time the Fiscal Oversight Board has been at odds with slot machine plans in Puerto Rico. The Union of Route Machine Operators (UNOMAR) took issue with other proposed changes earlier this year, which had also not been approved by the FOB.
