Costa Rica Considers 15 Percent Casino Tax

August 27, 2010

Lawmakers Tuesday debated proposed changes to a casino tax bill that would charge a 15 percent tax on earnings from casinos based in Costa Rica, but would exclude online betting operations. These would pay an annual fee of $50,000 instead.

The original bill, put forth by former President Oscar Arias, proposed a 2 percent tax on gambling operations – whether they are Costa Rica-based casinos or call centers accepting international bets here – sparking concern in the casino and online gaming industry.

Should the stiffer tax be applied, it would generate an estimated $30 million in annual tax earnings, the Finance Ministry said.

However, that estimate is about $50 million less than original government projections for casino tax revenues. In July 2009, former Finance Minister Guillermo Zúñiga said a 2 percent tax would bring from $80 to $85 million into state coffers. President Laura Chinchilla has said she hopes the money will help fund citizen security programs.

Another motivation for the casino tax is to reduce the nation’s ever-expanding fiscal deficit. In May, t he Finance Ministry reported that the public deficit stands at over ¢292 billion ($556 million), more than double the ¢127 billion mark ($242 million) registered through the first four months of 2009. The deficit, which currently represents 2.18 percent of the country’s gross domestic product (GDP), is expected to reach 4.8 percent, or about ¢876 billion ($1.67 billion), by the end of the year.

In 2009, the Costa Rican Tourism Board (ICT) reported that there were 53 casinos in Costa Rica, and an estimated 300 online betting operations and call centers. In 2008, the gambling and betting industry raked in an estimated $4 billion.

“The principal idea of the bill is to regulate activity,” said Zúñiga, who is now a legislator for the National Liberation Party (PLN). “Gambling is something that we are currently not monitoring and, therefore, not taking advantage of. If we can regulate it, it could create millions of dollars for the economy.”

–Adam Williams

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