International edition
July 31, 2021

The City appealed a court ruling that allowed the firm to operate beyond contract expiration

Argentine Supreme Court to decide on Casino Buenos Aires' operation license

Argentine Supreme Court to decide on Casino Buenos Aires' operation license
Last April, Judge Pablo Cayssials granted Casino Buenos Aires a precautionary measure that suspended the end of the contract, which expired on October 8.
Argentina | 11/14/2019

The contract expired on October 8, but a National Court of Appeals held the precautionary measure that first-instance Judge Pablo Cayssials had signed in favor of the floating casinos. The company claims there were unexpected fee and gross receipt tax rises.

T

he future of both casino ships in Puerto Madero will be decided by the Supreme Court of Argentina. The highest court must decide whether to accept a complaint proceeding filed by the Buenos Aires City government against a ruling that allows the gambling halls operator to continue running the business even though its contract expired in October.

According to sources from the Buenos Aires City government, its Power of Attorney Office and the Buenos Aires City Lottery ('LOTBA' in Spanish) filed a complaint proceeding, after the National Court of Appeals for Administrative Litigation held the precautionary measure that Judge Pablo Cayssials had signed in the first instance, in favor of the Casino Buenos Aires claim.

The conflict was born at the same time the first riverboat casino, "Estrella de la Fortuna" (Fortune Star), began operating in 1999. Although the City's Constitution specifically prohibits the private gambling operation on Buenos Aires City land, the National Government —which then took over the business despite the City's autonomy— awarded the operation license because it was casino boats, and technically they are not on Buenos Aires soil.

In January 2006, the second ship, the "Princess", joined the other one. That decision was legally discussed by the City's government, among other things because it prevented it from charging taxes on gambling, but Justice rulings were always in favor of the casino, through different precautionary measures.

In 2016, after Mauricio Macri took office as Argentina's President, the national government decided to increase the fee rate from 20% to 30% on the operator company, and it also began the process to transfer full gaming jurisdiction to the City, which began charging a 12% gross receipts tax on gaming halls. That transfer was completed on July 1, 2017.

Due to this change, the company filed a lawsuit against both governments in 2017. It claimed that, since the State had imposed higher expenses, the economic balance of its business had changed, so it had the right to have the contract extended for a term to be defined with accounting procedures and other calculations.

The operator owners are Nortia, with a 50% stake, and the rest is split in two 25% stakes belonging to HAPSA (operator of the 'Hipódromo de Palermo' racetrack), and the other to Inverclub.

Last April, Judge Cayssials granted Casino Buenos Aires the precautionary measure, which suspended the end of the contract. The City appealed, but on July 18 the Appeals Court backed the Judge, and on October 24 it rejected a second complaint from the City's government. "For us, the contract is expired since October 8. That is why we now file a complaint proceeding with the Supreme Court. Meanwhile, we will continue charging the fee and gross receipt tax," confirmed sources from Buenos Aires City Lottery.

The fee and taxes charged by the City to casinos are the same as those levied to the gambling halls at the Palermo racetrack. The Supreme Court has no deadlines to decide whether to accept or not the complaint filed by the City, hence the situation could last for years. In addition, this landscape brings uncertainty to the nearly 3,500 people working in the two floating casinos.

Eventually, if the operation of the casino boats is over, the City's government must decide whether to close them, nationalize them or find some other legal way to keep them operating. It will have the same scenario in 2032, when the contract with HAPSA expires, for the operation of the gaming halls at the Palermo racetrack.

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