Saturday, February 13, 2010
Your lucky day? A bit about the Gambling Industry in Costa Rica.
Costa Rica, though not generally the first choice for a gambling themed vacation, has over the last few years continued growing as a new destination for those that enjoy playing their hand at poker, especially the popular Texas Hold-em. Few know that there are now prestigious International tournaments held in Costa Rica several times a year, with a decent selection of smaller tournaments found throughout the country year round. The larger tournaments now attract a number of Internationally recognized players, driving the stakes higher and bringing the excitement to a completely new level.
Historically, the gambling industry has always generated high-revenues, even more so when located in already popular tourist destinations. With Costa Rica’s continued growth as one of these popular tourist destinations, the tourism industry has served to fuel the success of Costa Rica’s burgeoning gambling industry.
Whether dealing with an online sports betting operation or visiting one of the 30+ Costa Rican Casinos, employees are almost always young, good looking, averaging between 18-30 years old, and earning anywhere from $600 to $1,800 USD a month. Since the average Costa Rican salary hovers around $400 USD per month, jobs in the gambling industry can be very attractive for those willing to work the demanding hours.
Costa Rica has a wide range of games to choose from, many with a set of rules unique to Costa Rica itself. The most popular Casino game found in Costa Rica is “21”, also referred to as “Rummy”. This is played similar to Blackjack, but with some of those special Tico rules applied. To start, you’re dealt two cards. You may request another card, or stay with the two you have if you are close to 21. Equal to Blackjack, the goal is to get as close to 21 as possible, without going over. Face cards count as 10 and Aces count as 1 or 11, but here is where the twist kicks in……if your first three cards are three of a kind, or a straight (ex: 6, 7, & 8 of the same suit), you have a “Rummy”, and the payout doubles. If you’re lucky enough to have your three of a kind consist of all 7’s, this adds to 21 and results in an even higher payout. Unfortunately, if you happen to get 21 with just the two original cards, or get five cards without surpassing 21, in Costa Rica, there is no double payout, as is common in many other International casinos. Also, splitting pairs is permitted, as well as doubling down is permitted. In many cases you may find yourself losing on a push with the dealer, as the odds generally lean heavily towards the house.
In most of the bigger Costa Rica Casino facilities you will find rows of the typical Vegas Style coin and Electronic Slot Machines, Electronic Poker Machines, Canasta (aka: Roulette), Caribbean Stud Poker, Pai Gow Poker, Craps, Mini-Baccarat, Rummy Blackjack and Tute Poker, a Costa Rican favorite.
Costa Rica’s gambling industry is not without controversy, and has garnered some additional unwanted attention and scrutiny in the last few years. Recently, legislation was presented requiring new casino regulations restricting operating hours to no more than 12 per day, along with limiting the number of machines and tables for both new and existing resort facilities. While existing operators have since challenged the law, they warn it is still likely to have a material effect as the majority of the proposals are expected to eventually pass.
To be more specific, the Costa Rican Government enacted Decree no. 34581 at the end of June 2008, two months after then Vice-President Laura Chinchilla, since voted in as President of the Republic of Costa Rica on February 7, 2010, stated her intention to subject the country’s casino industry to more stringent regulations, specifically in the wake of the announced entry to the gambling market of Russian casino developer Storm International, rumored to be engaged in a sophisticated form of organized crime.
Chinchilla, also serving at the time as the Minister of Justice to Costa Rica, promised that these new regulations would “restrict the industry, rather than encourage it.” The final Decree emphasized that casinos “must be understood as an incentive for tourism” and that “it is in the public interest to regulate the operation of casinos so that their functioning serves to stimulate tourism in the country, without causing moral damage.”
The new regulations, not widely enforced at this time, largely conform to those measures previously proposed by then Vice-President Chinchilla, and implemented by the then standing President Oscar Arias. These regulations extended limitations of normal operating hours from 6pm until 6am, where in Chinchilla had previously declared all casinos in Costa Rica would be restricted to only operating from 6pm to 2am. The softening of her position may have been brought on by the imminent elimination of approximately 3000 jobs which would have been eliminated right in the middle of the ongoing global recession registering record numbers of unemployed. To this day, casinos pretty much work the hours they want, as there is no solid regulation in place.
Nonetheless, the Decree does impose major restrictions on new casino projects to be built in the country, limiting such projects to 3-star hotels or above, having a minimum 60-room capacity, and not permitting any stand alone gambling operations to be built. The new decree also contains strict limits on the number of slot machines and gaming tables permitted in gambling establishments, capping them at 10 tables total and no more than 60 machines for a 60-room hotel. Operators are permitted to add an additional machine for each room above this 60-room capacity, with an extra gaming table for each additional 10 rooms will be permitted as well. Though overall restrictions will limit the size of the gaming section of any developing property to no more than 15% of the total area of construction.
Once a loosely regulated industry, now prior to opening, casinos will have to obtain the approval of Costa Rica’s Ministry of Public Security that recently declared gambling a “sickness”, as well as authorization from local authorities and permits by ICT, the governing tourism board that will partially serve as a watchdog.
As if this part wasn’t touchy enough, Costa Rica is home to more than 200 online gambling companies. Due to the absence of legislation aimed directly at online gambling, the operations of Costa Rica-based gaming companies are for the most part not subject to the regulations, monitoring, and testing to which most offshore governments subject their licensees. Most of these companies are, or at least were self-regulated. With the lack of an official entity to recognize license holders, there is presently no betting or gaming tax. Instead, companies operate under a "data processing" license.
In September 2007, the PAC (Partido Accion Ciudadana) introduced a bill that would tax Casino and Sportsbooks Operations based on the number of employees on their payroll. The annual tax would kick in on operations with at least 10 employees charging a fee based on the total number of employees. They were also seeking to set a licensing scheme in place that would require Online Casinos and Sportsbooks to register with the Economic, Industry and Commerce Ministry. The Costa Rica Finance Ministry is proposing a 2 percent tax on income earned by the gambling industry. The government believes it can generate $85 million as a result, something that would help fill the government coffers which have suffered as the global economic crisis grinds on.
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 let go about 500 employees," he said.
Government officials have refuted any notion that Costa Rica’s move to tax and regulate gaming was related to the country’s inclusion alongside a list of countries that failed to meet international tax standards that was published by the Paris-based Organization for Economic Co-operation and Development (OECD) in April 2009.
Costa Rica’s reputation as an online gaming jurisdiction has also suffered significantly since the United States’ crack down on 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 who’s former-chief executive David Carruthers pleaded guilty to violations of US gambling law following his 2006 arrest in Dallas, Texas while in transit between London and his Costa Rican home.
In the end, the future of the gambling industry in Costa Rica remains strong, but with eventual tougher regulations and limitations. Unfortunately, it will not be able to regulate the daily gamble that exists in Costa Rica when it comes to dealing with bad drivers, pot holed roads, ever rising prices, government red tape, the rising rate of crime, the fluctuating value of the colon, teak farm investments, real estate transactions, or any of the many risky endeavors we gamble with every day while living in the land of Pura Vida!
Author: Kimberly Barron, originally from Malibu, California has lived in Parismina and Manuel Antonio, Costa Rica for 20 years. Starting as a certified tour guide, she spent 15 years managing fishing lodges on the Caribbean Coast and later 4* & 5* Hotels on the Pacific Coast of Costa Rica. Currently semi-retired, Kimberly still works as the Marketing Director for Byblos Resort & Casino and Hotel Makanda by the Sea.