International edition
June 21, 2021

Exclusive interview with Patricio Herman, Gaming Business Director, Sun Dreams

Sun Dreams authority talks tax impact on gambling industry  

Sun Dreams authority talks tax impact on gambling industry  
Panama might have not turned into an “at-first-sight attractive market” with the government imposing a 5%t tax on bets last year, applying to every cash withdrawal transaction in casinos, bingo halls, slot parlors, tracks, and sports betting shops. Ye
Panama | 11/30/2016

Panama might have not turned into an “at-first-sight attractive market” with the government imposing a 5%t tax on bets last year, applying to every cash withdrawal transaction in casinos, bingo halls, slot parlors, tracks, and sports betting shops. Yet, Sun Dreams has ratified its interest in the country with the opening of the Casino Osean Sun Downtown, the first joint project between Dreams and Sun International since their merger. 

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ldquo;Most unfavorable market conditions —when considering operation rules, not investment rules—, are those that impose a levy on clients, such are the cases of Panama and Chile,” Sun Dreams Gaming Business Direct Patricio Herman told Yogonet in an exclusive talk with Yogonet voicing also optimism that the Panamanian government will review tax regulations.

You have recently inaugurated the Casino Ocean Sun Downtown Panama. What can you tell us about the project? How much investment was required? Have you finished all works at the site?

El Casino Ocean Sun Downtown opened its doors in October and is fully operational from the very first day. This is the company's second casino in the country and the first project the company develops in a joint operation, following the merger between Dreams and Sun Internatinal only months ago.

The new entertainment center adds to the Ocean Sun Casino offer which together accounted for a global investment of around USD 90M with 600 slots machines and 47 gambling tables.

The project aimed at benefiting from the synergies, looking for new opportunities, improving the offer and the investment returns, by consolidating our Panama presence and also diversifying our customer base with a larger service offer

Such consolidation process in Panama is part of the guidance set by the company in  strengthening its operations in all the markets where it has a presence like Chile, Colombia and Peru. We are focused on that direction, heading towards it.

How would you describe the gaming offer in this new casino?

The new casino perfectly located in the center of the city of Panama, mainly focused on tourists visiting the city. It has 250 slots machines and 15 gambling tables and an interesting entertainment offer.

What are the similarities and differencies between the Ocean Sun Casino and the new Ocean Sun Downtown?

The Sun Ocean is focused on a high-level segment, providing a luxury offer and a five star hotel. Meanwhile, the Downtown targets a middle-class segment, with a four star hotel, which becomes a perfect plan for those looking for quality entertainment, seeking to enjoy Panama's nightlife.

Over the past months, the Panamanian gambling industry has voiced concern over the 5% tax recently imposed by the government. What is your strategy to counterweight the tax impact? Would you still call Panama an interesting gambling hub for foreign investors?

It is always better for operators to pay an extra percentage in gambling taxes rather than any tax that applies directly to clients, like in the case of Panama or Chile. In both cases, our counterweight strategy is to provide compensation through credit gifts that clients can use to play, access free drinks and snaks or attend shows among other benefits. Above all, we seek to provide quality service that improves such barrier on customers.

In the case of Panama, trends are negative as a result of the tax which adds to the decrease in gambling revenue since the tax first came into force

At first sight, I would not call Panama an attractive market. The initial investment for the Ocean Sun Trump was made before the tax but still we went for an agressive growth strategy, expecting the government will review the application of the tax in order to balance inudstry trends. In the end, it is in everybody's good: the more income you make, the more taxes you get to collect.

Which would you say is currently the most competitive market in Latin America?

The most competitve market in the region is Peru, particularly Lima, because of the large number of casinos and halls that are concentrated accross the city, with more than just one important operator competing on the same block.

Panama and Colombia are very competitive markets as well, forcing us to be creative and innovative in order to access new segments. That is an important part of what we are doing right now with our second move in Panama. Also, in Colombia in the near future, with a similar project that will join the Sun Nao Casino, the biggest and most modern entertainment center in the Caribbean region of Colombia.

Which market offers the most unfavorable conditions of casino operators?

Regarding operation rules, not investment rules, most unfavorable conditions are those that impose a tax on clients, like in the case of Panama and Chile.

In Chile, under the “Entry Ticket” rule the government collects a direct tax on the people that enter casinos. Even thought operators double their compensation efforts even by taking care of the ticket, customers still sense it as disadvantage facing other casino competitors.

Furthermore, there are markets with no clear and strict rules that really ban and control illegal gambling halls which pay no gambling tax, have no obligation to control punters' age or sharing returns. There are several reports that say that these are the main trouble spots leading to gambling addiction problems having no official controls, gaining licenses to operate so called “skill-based slots” allowing children to bet money without any sanctions.

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