In many parts of Latin America, where casino gaming is restricted, the gap is being filled by racinos - casinos at racetracks. and this is funding the renovation of many famous tracks in the region. James Marrison investigates...
Casino gaming in Latin America is still a highly charged, political and controversial issue and debates all over the region are often heated, acrimonious and can drag on for years.
In Venezuela, the debate once became so intense that two legislators actually had a fist fight mid-session before it had to be broken up by other members of the congress.
In Mexico, every single attempt to replace the outdated Raffles Law of 1947 with a comprehensive new gaming act has failed and, when it comes to casinos, the country shares the same problem as almost every other region in South America - widespread and unchecked political corruption.
It is feared that the approval of gambling licences will provide an irresistible temptation for already fraudulent local officials, while at the same time many believe that casinos will only drag the impoverished into total bankruptcy.
However, all this hasn’t stopped people from gambling. While, legally speaking, full-scale casinos are still banned in Mexico, the reality is that there are plenty of places where Mexicans can make a bet in casino-type surroundings, due to a now largely exploited loophole in the Raffles Law.
In fact, large-scale gaming parlours, which have everything apart from gaming tables and roulette, are now commonplace in many other parts of Latin America due to the emerging racino model, where customers can place a bet in casinos attached to racetracks.
Casinos now seem increasingly inevitable across the entire South American region and key to this have been recent developments in the gaming law in Chile. Chile, having awarded 15 additional licences this year, is leading the way and it is likely that the rest of the region will follow suit and grant licences under similar criteria.
In almost all cases, casino legislation in Latin America is veering towards casinos in five-star hotels in tourist hotspots. Meanwhile, the racino model is being adopted all over the region as a kind of stop gap strategy before fully fledged five-star casinos are given the green light.
Racinos have grown rapidly in the US and Canada over the last few years, but they are a relatively new phenomenon in Latin America. They are in many ways an ideal solution as they meet demand and, according to recent statistics, Latin Americans really like to gamble. It is estimated that each citizen spends US$250 per year on gambling. In Colombia, for example, where casinos are permitted, over $33,000 is bet per hour in casinos, bingo halls and slot hallsand overall gaming generates around $1.3bn in revenue each year.
The negative image that is associated with casinos does not, however, seem to apply to racetracks. In Latin America, they have a long, illustrious history going back over a century and are often situated in the most beautiful parts of the country. While casinos are seen to be a threat to the moral fibre and cultural identity of the nation, racetracks are often recognised as harking back to a golden bygone era. In many cases they are historically registered landmarks, which has saved many of them from destruction.
As racing in the region has declined, these landmarks have fallen into a state of disrepair and in some cases have been abandoned altogether. Not only do racinos help provide the necessary funding to rebuild neglected landmarks, they also bring customers back to the racetracks, providing vital funding to those involved in the beleaguered horse racing industry, which in some countries is a major employer.
Venezuela, for instance, provides jobs and security for 300,000 people through horse racing and a good example of the success of racinos in Latin America is Buenos Aires. Argentina now has more casinos than any other Latin American country, yet for the nation’s capital they remain a sensitive subject as, legally speaking, casinos are banned in the city. However, there are still two floating casinos that operate out of the city harbour. This has naturally caused all kinds of problems as the Buenos Aires government is firmly opposed to their existence and has tried on many occasions to close them.
Surprisingly, however, the installation of slot machines at the Palermo racetrack has, relatively speaking, gone unopposed and the racino there is quietly transforming the area in a very positive way. Where before the area was more or less deserted, it is now bustling with activity, with customers on their way to and from the racetrack and casino.
The racetrack first opened back in 1876, is located near the city centre and boasts one of the best racing tracks in the world. It stages 1,700 races a year, including one of the most important events in the racing calendar, the Gran Premio Nacional. It was privatised by executive order in 1992 and is now run by private company Argentino de Palermo, which won the right to run the racetrack until 2017.
The popularity of racinos among racetrack owners has increased due to the US now broadcasting live races in Latin America via telecasting. However, in order to raise the funds to invest in the technology necessary to stage live telecasts, the tracks need money and one way to raise the funds is to build racinos.
The glorious San Isidro track in the province of Buenos Aires, for example, now telecasts six live races a week via Magna Entertainment, one of America’s leading suppliers, through simulcasting of live racing content. Owned by the Argentine Jockey Club, the track now plans to telecast all of its races to the Latin American public and in order to raise money to do so is pressing the government of the Buenos Aires province to allow it to open a racino. The club looks like it will achieve its goal and receive funding for televised racing.
The same thing is happening in Chile, Panama and Uruguay. In Chile, it is hoped that telecasting will offer an incentive for race owners to provide additional revenue to the industry. When telecasting is up and running, one per cent of all money taken in bets in the US will go to the race prize fund and the three main racetracks lobbying the government to allow them to operate racinos. This would be especially advantageous to Club Santiago in the country’s capital, as the new casino law passed in Chile states that casinos would only be permitted in tourist zones and not in the capital.
Meanwhile, the racino model, it is hoped, will further invigorate the operations of the Presidente racetrack in Panama, which first opened its doors in 1956. Takings had been falling steadily, from US$24.2m in 2001 to just $22.1m in 2004. However, a 90 per cent stake in the track was bought in June 2005 by Spanish group Codere and has since then been completely renovated.
Founded in 1980, the Codere group is one of the largest slot machine manufacturers in Spain, operates 45,000 machines around the world and has been active in the racetrack business in Latin America for the past six years. And since its renovation, the track has seen improved returns; during the first quarter of this year, it accepted $12m in bets.
Once again, in order to further improve takings, Codere announced plans to operate a racino. The purchase of the racetrack was approved by the Gaming Board of Panama in October 2000 and it was also authorised to operate 500 machines and a bingo hall on the premises.
This is a business strategy that Codere has also used with great success in Uruguay in El Dromo Nacional de Maroas racetrack. This was the first time that Codere had adopted the racino model. The racetrack El Dromo Nacional de Maroas is one of the oldest tracks in Latin America and was first opened by the British community in Montevideo in 1847. In 1997, the Jockey Club went bankrupt and five years later the government auctioned off the racetrack.
The track had been left abandoned and had slowly been deteriorating for 20 years, having been left in a state of total disrepair, when Dromo de Maroas Edpica Rioplatense bid for and won the right to reopen the track. It is now one of the most modern racetracks on the continent, having been completely restored to its former glory after a $50m facelift. The company has the rights to operate racing on the premises for the next 30 years and now offers live broadcasts to the US via an agreement that was signed in December by the Magma group.
Some countries, however, seem more reluctant to embrace the racino model. Most notable is in Venezuela, where the racino model would probably be ideal. A few years ago, Venezuelans gambled an estimated $125m a year on horse racing alone, with Venezuela having arguably the longest and most distinguished horse racing tradition in the entire region.
Nevertheless, the industry has suffered under the leadership of populist leader and former ex-paratrooper Hugo Chavez. Chavez banned televised broadcasts of racing, as they were considered a game of chance rather than a sport, and bets were taxed heavily.
However, it is likely that the number of racinos will continue to increase on the back of proven success stories such as the Maroas and Palermo racetracks and racinos could well prove to be the lifeblood of many other tracks in the future. After all, larger purses usually mean a better standard of horse racing, consequently increasing the number of people who attend race meets.
Furthermore, it is likely that combining races with casino-type games such as slot machines will be implemented further around the region, especially if the live telecasts to the US prove a success.
In many countries in Latin America, where casinos are banned or strictly limited, racinos seem, for now at least, to be doing a good job of filling the gap of the demand for gaming centres and are helping restore old tracks to their former glory.