INSIGHT LATIN AMERICAN FOCUS


Beyond raids and criminal prosecutions the government has been unable to


regulate the industry more closely. Due to the high tax rate plus additional taxes on players put in place in 2010, most operators have closed their


operations while


players are turning in increasing numbers


to offshore operators and illegal betting centres.


charged with a number of offences while prosecutors claimed that the company had failed to pay enough taxes. In a corruption scandal that involved a number of local lawmakers, the government shut down the bingo halls and confiscated gaming equipment that had been operating illegally.


Te National Lottery Commission of Charity and Health (Lonabol), which had also played a regulatory role before new rules were enacted in 2010, was hit too. Ex-head of Lonabol, Juan Canelas Morató, was found guilty in 2008 of extorting Lotex out of millions of dollars in 2004 and was handed a two and a half year prison sentence.


In a wide sweeping investigation into the organisation, a further handful of high ranking members of Lonabol also faced similar charges for offences carried out between 2003 and 2007. In 2010, after an investigation into the gambling industry, the Public Ministry established that 69 per cent of the gaming houses that operated in Cochabamba, La Paz and Santa Cruz were illegal and only 31 per cent met the requirements established by law.


Incredibly the effects of these corruption scandals are still being felt over 10 years later. In March this year a Bolivian court sentenced the former Minister of Health, Sonia Polo, to eight years in prison for breach of duties and acting in contrary to the Constitution.


Te former government official, who had been removed from her post following the accusations, was investigated for her actions to extend a lottery licence held by Lotex. In 2002, the Bolivian National Lottery signed a contract with Lotex to run charitable games on its behalf for a period of ten years. Polo had, according to prosecutors, illegally granted a licence extension for a term of 20 years.


THE GAMING LAW OF 2010


Initially, President Morales aimed to regulate gaming more closely and proposed the creation of a special gaming tax proposing that the proceeds would go directly to the Ministry of Health (as is the case in Colombia).


But the initiative met with fierce resistance by the majority of lawmakers from municipal and


state governments, who argued that the new gaming law was a direct attempt by the federal government to intervene in a matter, which they argued, should come exclusively under the jurisdiction of the individual state.


Another initiative was put forward by Lonabol. Tis sought to restrict the number of gaming parlours per province and divide slot parlours into different categories. Tis too fell by the wayside.


But it wasn’t long before the government was able to get gambling regulation through both houses. In November 2010 the government passed Morales’s gaming law creating a new gaming board called Te Authority of Taxation and Social Control over Gaming (AJ). Law 060 “Te Law on Lottery and Games of Chance” put the board under the supervision of the Ministry of Economy.


Te tax rate was extremely high. A 30 per cent tax was imposed on gross income on all types of gaming - 100 per cent of which was assigned to the National Treasury. An additional 15 per cent tax was placed on the player taxable at source. 70 per cent of this was


In November 2010 the government passed Morales’s gaming law creating a new gaming board called The Authority of Taxation and Social Control over Gaming. The Law on Lottery and Games of Chance put the board under the supervision of the Ministry of Economy. The tax rate was


extremely high. A 30 per cent tax was imposed on gross income on all types of gaming - 100 per cent of which was assigned to the National Treasury.


distributed to the National Treasury, 15 per cent to the departmental governments and 15 per cent to the municipal governments.


Industry associations criticised the bill in a joint letter sent to Morales before the bill was passed saying that the new tax rate would lead to illegal gambling and tax evasion as the taxes were “impossible to apply and unfeasible” adding that the gaming bill put some 7,000 sources of direct employment at risk as well as 14,000 indirect jobs.


“What the Ministry of Finance is trying to achieve is the death of our business,” stakeholders said in their letter to the President.


However, their pleas fell on deaf ears and despite workers taking to the streets to protest against the new act on February 2, 2011, Law 060 entered into force.


THE LAND-BASED SECTOR


Much of what the industry warned would happen back in 2010 has come true and illegal gambling, especially in the form of slots in small businesses, has expanded rapidly. According to the AJ, since 2011 as many as 20,000 illegal gaming machines have been seized, of which 18,200 were subsequently destroyed. While boards in other jurisdictions announce revenues generated by the industry almost the only news coming from the AJ is when it announces that it has carried out yet another raid and is about to destroy a newly confiscated batch of gaming machines.


Indeed, beyond raids and criminal prosecutions the government has been unable to regulate the industry more closely. Due to the high tax rate plus additional taxes on players put in place in 2010, most operators have closed their operations while players are turning in increasing numbers to offshore operators and illegal betting centres. In fact there is just one licensed small-scale operator now in Bolivia: Curucusi Games S.R.L.


Meanwhile, illegal gambling continues to proliferate. Illegal betting centres take a rather peculiar form in Bolivia having evolved from slot parlours to smaller operations based in private homes, which allow locals to bet online via computers. In addition, online betting centres made to look


WIRE / PULSE / INSIGHT / REPORTS P53


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