Ricardo Rozas June 6 2012 Changes to casino regulations favour foreign vessels JJR Abogados | Shipping & Transport - Chile Ricardo Rozas Shipping & Transport IntroductionOriginal draftEnacted lawCommentIntroductionIn 2011 the government promoted a draft amendment of the regulation that applies to casinos based on cruise vessels, in order to increase economic competitiveness in this market and to bring Chile into line with other significant economic activities (for further details please see "Forthcoming changes to casino regulations for cruise vessels").By November 2011 the draft had been completed and approved by Congress, and had become law. However, during discussion before Congress, several principles of the new regulation were discarded by the legislature, thus jeopardising the expected benefits of the new rules for casinos based on cruise vessels.Original draftThe original draft proposed to:allow foreign vessels to operate casinos in Chilean territorial waters;reduce the minimum sleeping accommodation capacity for vessels wishing to run a casino, from 120 to 80 berths;allow the casino's licence holder to be the same company as the vessel's owner, operator or handler; andintroduce a tax exemption in relation to special taxes paid by national and foreign operators.These modifications were based on the old regulation. The changes were expected to make important improvements in line with the principle of economic competitiveness.Enacted lawThe enacted Casino Law, in all matters regarding cruise vessels, kept only partially to the draft amendment. In contrast with the set of rules proposed in the draft, the law now in force provides that:foreign vessels are permitted to operate casinos in Chilean territorial waters, subject to a series of conditions - for example:the vessel must be licensed to navigate in Chilean waters;the tour cannot last for fewer than three days and must have a route of at least 500 nautical miles (this requirement applies to every vessel wishing to operate a casino on board, including Chilean vessels); andif the casino's licence holder differs from the vessel's owner, operator or handler, the vessel must be registered with the Chilean casino regulator;the minimum sleeping accommodation capacity for vessels wishing to run a casino is 120 berths (ie, no reduction);only foreign vessels may have a casino working on board that is operated by the same company as the vessel's owner, operator or handler; andonly foreign vessels have the right to a special tax exemption. They also face much more relaxed inspection from the Chilean casino regulator when compared with Chilean vessels.CommentThe original draft of the amendment to the law intended to increase the economic competitiveness for both foreign and Chilean vessels. However, this particular goal has not been fully achieved. Instead, the new Casino Law creates special benefits for foreign vessels wishing to operate casinos on board, creating incentives for such vessels to include Chilean ports on their schedules, while Chilean vessels must continue to abide by the same challenging regulation.If the government's purpose is to increase economic competitiveness significantly in the cruise vessels market, it is feared that this may simply be the first of many reforms to come, all aimed at reducing costs incurred by owners of cruise vessels calling at Chilean ports.For further information on this topic please contact Ricardo Rozas at Jorquiera & Rozas Abogados by telephone (+56 2 580 9300), fax (+56 2 580 9311) or email ([email protected]).