The Casino operators throughout the world are struggling to stay afloat. Chile is no different. The COVID19 pandemic has broken the spine of the industry, but Chile Government has come up with a plan. The government may soon allow the casino operators to expand into online gambling to offset the loss.
As per local media reports, the Chilean Government is planning to send Congress a proposal. This proposal allows the automatic renewal of the operating permits of the 14 casinos that are scheduled to expire in 2020. This would also ensure that the right to operate of the casinos is extended for another 12 months. Initially, it was planned to have a bidding process and automatic renewal was out of the question.
Chile has 26 casinos and all of them were closed in the mid of March due to the COVID19 pandemic. None of the casinos has opened yet. The government has already announced that the casinos might not operate till September or even October.
This will be very important for both the casino operators and the municipalities that host them. There are some casinos that are run by the local governments and the lion share of the operating budget comes from gaming revenue.
Finance Undersecretary, Francisco Moreno said that he does not want the process renewal of casino permits to go under adverse conditions. He said that this would impact the revenue of the municipalities for the next 15 years.
Moreno expects the casino operators to agree to increase the gross tax rate to increase from 20% to 25% during the 12 months of extension. He said that the casinos would be allowed to develop remote gaming platforms within the respective perimeter. The perimeter is the border of the host municipality.
The Superintendencia de Casinos de Juego (SCJ) is an autonomous body and it oversees the casino activity. The SCJ is publically lobbying for the operators to carry online gambling, provided effective tax and regulatory framework is established by the government. SCJ talks about the equilibrium of economic needs and social responsibilities.
COVID19 pandemic is not the only thing that has hit the casinos in Chile. The casinos were forced to shut during the civil unrest in the country in October last year. Casinos like Enjoy SA are in huge financial crisis and fighting for existence.
Enjoy SA has filed for bankruptcy in April. The operations of the casino in Argentina, Chile, and Uruguay are shut due to the COVID19 pandemic. The company has reported a net loss of $11.4mn in the first quarter ending March 31st in 2020. The company hoped for reorganization with a debt of $150mn. However, this has been called off as there is no certainty on the reopening of the operations. In fact, in May, the company has already warned that it would not be able to make interest payments on international bonds or local notes as well.
The Enjoy SA has also filed bankruptcy protection for Chapter 15 in the United States. This allows US courts to recognize bankruptcy filling in another country and offer protection to the company from US creditors.