Proposed Bill Would Tax Gambling Earnings

July 24, 2009

Within the next two weeks, the Costa Rica Finance Ministry will send a bill to the Legislative Assembly proposing a 2 percent tax on income earned by the gambling, gaming and betting industry. The ministry estimates that such a tax would generate up to $85 million for government coffers.

Total income in the gaming industry is calculated by money earned by casinos, as well as by the online betting industry, which includes gambling games like poker as well as betting on sports. There are 46 operating casinos in Costa Rica and 300 gambling-related businesses, including Web sites and call centers that receive calls for gambling and betting purposes.

If the bill passes, a regulatory body would ensure that gambling locations and affiliates are licensed and that they honor the new tax. The regulatory body would be comprised of Finance Ministry representatives and other financial, security and tourism officials.

Although the anticipated tax would pump a large sum of money into the Costa Rican government, companies and employees within the gaming industry are concerned about potential ramifications. The gambling industry has experienced significant drops in revenue this year, and the tax would further reduce overall earnings.

Jorge Hidalgo, vice president of the Costa Rican Association of Casinos, said the industry is among the hardest hit by the recession.

“Activity has fallen about 35 percent and, in addition to that, we have fewer work hours and have had to lay off approximately 500 employees,” he said.

The bill is expected to reach the Legislative Assembly on Aug. 3.

–Adam Williams

 

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