Puerto Rico's governor introduces sports betting legislation

Puerto Rico governor Ricardo Antonio Rosselló Nevares announced the introduction of a bill to authorize betting on sports events and online video games. The measure seeks to authorize this kind of betting, which has been spreading stateside and could generate about USD 3 billion annually there by 2023, the governor said, adding that Puerto Rico could reap between $44 million and $66 million annually from online gambling, according to a study by Spectrum Gaming Group.

The governor’s office said in a release that another independent study, by the Innovation Group, projects USD 68 million in revenue by 2022, and that both “concluded that the introduction of this segment in Puerto Rico will not result in the cannibalization” of the island casinos’ income because the latter “have the potential to capture a different demographic than the one frequented” at casinos.

The author of the legislation, majority New Progressive Party (NPP) Rep. Néstor Alonso Vega, also attended the news conference. He is chairman of the House Tourism Committee, where the legislation was to be introduced Monday.

In his remarks, Rosselló recalled the U.S. Supreme Court case last year Murphy v. National Collegiate Athletic Association, which he said opened the door for the regulation of sports betting. As of February, eight states were accepting sport event bets; three states and Washington, D.C. have approved legislation but are “not operational yet,” the governor said, adding that 23 states have introduced legislation, seven states have “expressed interest in introducing legislation” and only nine states have not considered related measures.

In addition, the legislation would authorize online fantasy sports, or eSports, gambling, which the governor said, is not adequately regulated in other U.S. jurisdictions and allows for bets to be made on video games such as Madden, Fortnite, Rainbow Six and Gears of War.

“Electronic games are a growing segment, with an estimated 400 million people who form a younger demographic global audience,” Rosselló said. “It is estimated that in the gaming industry these will have a global economic impact of over $3 billion in 2023. With this aggressive step, we can position Puerto Rico as a destination that promotes eSports, in order to attract investment to the Puerto Rico’s economy.”

The measure proposes generating revenue for the Treasury, from operating licenses and taxes on prizes and plays, for which a 6 percent rate is proposed for bets made in person and 11 percent on online bets. Those rates are intended to be the lowest in the nation, the administration said, to be as attractive and competitive a jurisdiction as possible.

The legislation would create a new Gambling Commission, following a model similar to states that have adopted legislation. The commission would be composed of seven members of the public and private sectors and be responsible for regulating sports betting, equestrian sports, and electronic games, among others.

While the Gambling Commission will be the regulating entity, the Financial Institutions Commissioner’s Office (Ocif by its Spanish acronym) will be tasked with oversight, as is its current duty over games of chance.

These types of bets can be made at any place authorized by the Commission, such as casinos, racetracks and lodging establishments. The release said “sports betting licenses at licensed horse-betting agencies will also have a 50 percent discount for the first 10 years,” and that, “to help those Puerto Ricans who participated in the sport of cockfighting reinvent themselves, licenses will be authorized” free of charge for the first 10 years to legally run cockpits before the practice was made illegal.

Rosselló said that “on the social aspect, the legislation provides for all the security safeguards to exist in order to guarantee that children under 18 do not participate in these games. It will also firmly address those problems of gambling addiction that may arise. These matters are a priority, as well as providing adequate control to avoid money laundering and tax evasion.”

The revenue obtained from the industry “will be distributed to help defray the retirement of pensioners and programs aimed at promoting youth sports; for services against gambling addiction; to offer better equipment to the police; to promote educational initiatives; and for administrative and implementation costs of the new Commission,” according to the governor’s office.

“This industry has the potential to convert Puerto Rico into a jurisdiction in the vanguard of allowing the establishment of this new model, which will have a positive effect on our economy,” Rosselló said. “We have worked on aggressive legislation that aspires at being able to market the island at the international and national levels as an attractive destination for the millions of people who bet on sports events.” The governor made the announcement at the Plazoleta Lagos Salados located within the Puerto Rico Convention Center District in San Juan’s Miramar neighborhood.