Cruise vessel casinos
The cruising vessel market in Chile is struggling. Despite the sector showing constant growth elsewhere in the world, cruise vessels calling at Chilean ports have decreased dramatically since 2008, with an accumulated fall of 40% between 2008 and the 2010 to 2011 season.
This trend has been caused first by the high maritime and pilotage costs for ship operators, and second by the current prohibition on the functioning of game casinos in territorial waters. However, this may be about to change.
Under the Casinos Law (19,995), which establishes the general basis for the authorisation, functioning and oversight of game casinos, the following barriers exist to entering the market:
- Only Chilean flag major merchant vessels, duly registered in the corresponding registry, can be authorised to run a game casino.
- Severe general limitations exist in regard to the kind of company that may exploit a casino in Chile in terms of its stock composition, minimum amount, terms and method of capital income and administrative authorisations.
- Under the law, merchant vessel operators that intend to run a game casino must:
- provide sleeping accommodation capacity for at least 120 passengers;
- sail in waters that are under Chilean jurisdiction;
- offer (as their main function) the transport of passengers as tourists;
- develop authorised games only on a declared tourist circuit (of at least three days' or 500 nautical miles' duration) and only when the vessel is already underway; and
- limit the amount of authorised games, by category, in proportion to the number of passengers.
Furthermore, the casino licence holder must not be the vessel's shipowner, operator, charterer or handler and the operating company's domicile must be a city within a port included in the circuit.
As part of the government's aim of increasing economic competitiveness and bringing Chile in line with other relevant markets, a draft amendment to the law has been proposed. Such amendment aims to diminish the aforementioned barriers to competition within the cruise vessels market. The proposed changes include:
- allowing foreign vessels to exploit casinos in Chilean territorial waters (draft Article 63bis);
- reducing the minimum sleeping accommodation capacity for vessels wishing to run a casino from 120 to 80 berths;
- allowing the casino's licence holder to be the same company as the vessel's owner, shipowner, operator or handler; and
- introducing a tax exemption in relation to special taxes paid by national and foreign operators.
Finally, control and oversight of such casinos will be taken from the common regulation established by the Casinos Law. The law will be subject to compliance with local regulations only in situations relating to money laundering.
Under the proposed changes, the excessively onerous requirements currently in force for the exploitation of casino games in cruising vessels will be at least partially eliminated. It is hoped that this will lead to an increase in cruising vessels' activities in Chile in line with such activities worldwide.
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]).