Puerto Rico Lawmakers Welcome Gambling's Economic Impact

March 24, 2023
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Puerto Rico continues to recover from two devastating hurricanes and a recession, but the territory’s Speaker of the House Rafael Hernandez Montanez stressed the economy was stable and open for business, especially when it comes to gambling.

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Puerto Rico continues to recover from two devastating hurricanes and a recession, but the territory’s Speaker of the House Rafael Hernandez Montanez stressed the economy was stable and open for business, especially when it comes to gambling.

“We recognize the synergy between stability, tourism and gambling,” said Montanez, who was in Washington, D.C. this week with a delegation of Puerto Rican lawmakers and aides to meet with lobbyists, gaming company executives and several members of Congress.

“For us, it’s very important that in our legal structure, there’s transparency and accountability of the process,” he said. “We are here to ask you from our part what you need so that business can be done transparently, and in a way that is going to have a huge impact on our economy.”

Situated about 1,150 miles from Florida, Puerto Rico was devastated by Hurricane Maria more than five years ago, leaving parts of the territory with a severe lack of fresh water and power grid that needed to be rebuilt. At the time of the hurricane, the U.S. territory was already struggling to repay $70bn in debt.

Efforts to stabilize the economy were then affected by the coronavirus pandemic, devastating the island’s tourism industry. That was followed in September 2022 by Hurricane Fiona, leading to additional damage to the island’s power grid and water supply.

Montanez acknowledged the U.S. territory has dealt with some severe setbacks but said that after four years of little action in the Legislative Assembly of Puerto Rico, lawmakers have been able to pass two consecutive budget bills, and reach a compromise in both chambers to stabilize the manufacturing industry and restructure the territory's debt.

“Because we stopped the bleeding … now we want economic growth,” Montanez, a member of the Popular Democratic Party (PDP), said Monday (March 20) during an hour-long policy briefing hosted by the National Council of Legislators from Gaming States (NCLGS) and Prime Policy Group in Washington, D.C.

The event was attended by several gaming attorneys, as well as executives from FanDuel, DraftKings, OpenBet, MVB Bank and Sightline Payments.

Currently, Puerto Rico has one racetrack, 500 off-track betting (OTB) locations, a lottery, two retail sportsbooks operated by BetMGM and Caesars Entertainment, and 18 traditional casinos. The racetrack and OTBs are allowed to host up to 5,000 slot machines but currently operate 2,500.

Retail and online sports betting were enacted on July 29, 2019 with Law 81, which also created the Puerto Rico Gaming Commission (PRGC) by combining the Puerto Rico Tourism Company and Horseracing Commission. There is no limit on the number of sports-betting licenses available.

Although some license applications have been awarded, no mobile sportsbook platforms have begun operations yet as they wait for the regulation process to be finalized.

House Majority Leader Angel Matos García, also a member of the PDP, said he expected mobile sports betting to launch by the end of the year as the PRGC continues to promulgate rules.

“We still have some work to do,” said Garcia, who asked gaming executives if it was the laws or the regulations being considered to govern sports betting that was delaying the launch.

Matt Scalf, government affairs manager with DraftKings, said they company was working with the commission right now to get up and running and it has less to do with the legislation passed than with the regulations the PRGC is promulgating.

“We have a history of operating in multiple states and what we saw is the PRGC reinventing the wheel a little bit rather that using models we’ve set up in other states,” Scalf said. “That’s just going to make it slower to launch but we are committed to launching.”

Cesar Fernandez, head of state government affairs at FanDuel, said he appreciated that some regulations would be specific to the territory but recommended regulators follow models that have been set out in other states.

Both Garcia and Montanez asked attendees for recommendations or amendments so that they can consider any updates to the proposed regulations.

Fernandez said regulators are creating a lot of rules that create friction for FanDuel to operate.

“I’ll give you a perfect example, there is an in-person registration requirement for individuals to bet,” he said. “We communicated to the regulator that we would like a waiver for certain bets up to a certain dollar amount.”

Fernandez questioned whether a visitor to Puerto Rico who was going to bet $100 or $200 on a game should have to register for that one specific bet.

“If you think about it from the standpoint of tourism. You open up FanDuel and try to place a bet and aren’t used to that type of friction,” he said, referring to the need to register a Puerto Rican account in-person by a player who may already have a FanDuel account elsewhere. “How do we change the requirement for in-person registration or at least give some flexibility on low dollar amount bets?”

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