Are bingo halls and casinos the salvation of the Venezuelan economy? | Yogonet International
Economists' outlook

Are bingo halls and casinos the salvation of the Venezuelan economy?

Casinos in Venezuela reopen, after being closed for a decade.
2021-09-28
Venezuela
Reading time 3:12 min
"For Maduro, it is necessary and important to open casinos due to, among other things, the possibility of revitalizing certain economic activities," said economist Leonardo Buniak, who stated that the president is taking "rapid opening" steps to try to revive the economy, "and he thinks that this is one way to do it."

The Government of Venezuela, in a process of reopening and economic flexibility, authorized the operation of casinos and bingo halls in the country ten years after their closure by then-President Hugo Chavez, but several experts consider that this measure will not have any significant effect on the nation's economy.

Venezuelan economist Manuel Sutherland explained that President Nicolás Maduro took this measure, contrary to the one proposed by his predecessor and political godfather, Hugo Chávez, “because he is in a process of reopening to so that in some way the economy may recover, although he is doing it so in a very precarious and improvised manner”.

Chávez ordered the closure of these gambling houses considering them, among other things, "places of perdition", but now Maduro has given authorization so that 30 casinos may operate in the country, seeing them as a vital economic lifeline, a vision that is far different from his mentor's. But, contrary to what many think, the economist Leonardo Buniak explained that Maduro's decision does not necessarily mean that he is against Chávez.

"For Maduro, it is necessary as well as important to reopen the casinos due to, among other reasons, the possibility of revitalizing certain economic activities," stated Buniak, who also said that the president is taking steps of "rapid opening" to try to revive the economy" and he thinks that this is one way to do it."

Experts agree that the opening of casinos is not negative, but according to Sutherland, these types of measures are initiatives of the private sector and not of the Executive, which is limited to authorizing the openings. "The Government is not going to invest a dollar in the casino or buy infrastructure, therefore there is no diversion of resources from one area to another," he pointed out.

He also stressed that it will not have any significant impact on the country's Gross Domestic Product (GDP), although it can help to recover the jobs that were lost ten years ago as well as in the collection of taxes at the municipal level.

"Especially in the inland regions of the country, the activity of casinos could generate some taxes, especially for those municipalities to paint a sidewalk, remodel something or plant a tree," he said. Furthermore, Buniak affirmed that with this initiative about 12,000 direct jobs could be generated, benefiting the same number of families.

"It will not have an impact on employment in Venezuela, but it will generate jobs and that is positive," he added.

The economist pointed out that on an international level casinos are a business that generates high wealth for which they pay large taxes, which are then returned to society in the form of public services. There is also social responsibility, where these casinos have an obligation to maintain schools, hospitals, and infrastructure. "The question is whether these Venezuelan casinos are going to have a social responsibility to give back to society and to the cities where they are going to operate part of the wealth they are going to generate," he added.

In January of last year, when Maduro announced the opening of an international casino in the remodeled Humboldt hotel, located on top of Cerro El Ávila, in Caracas, he said that the resources collected would be invested in various areas of the State, such as health and the education.

However, Sutherland said that these types of businesses are difficult to control because, one can “come in and buy five million tokens in cash and bypass accounting, or make transfers via Zelle or anything that somehow eludes the tax tribute, so it is very difficult for that to really generate any significant tax income”.

Buniak believes that the opening of casinos will not affect national and international tourism either, because only a small proportion of people travel through casinos. “The tourist looks for basic services, infrastructure. At the tourist infrastructure level, the country suffers from great weaknesses, among other things, because there is no water, electricity, or gasoline,” he stated.

In Sutherland's opinion, the industry is the sector that can truly boost the country's economy, but "currently no investments are being made in this area because legal and political insecurity persists." He confirmed that "very large and radical" economic measures are needed in Venezuela for it to grow again.

"You have to look for a macroeconomic stabilization plan, an adjustment plan, an international loan, you have to change a lot of things in Venezuela and obviously the casino is a drop in an ocean of changes that are needed and have not yet come," he said. 

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