The Costa Rican gov­ern­ment has con­firmed plans to cre­ate a new gam­ing author­ity under forth­com­ing leg­is­la­tion that will also sub­ject all gam­ing com­pa­nies – online and offline – to tighter licens­ing and tax­a­tion require­ments, the country’s finance min­is­ter has announced.

The government’s plans to address Costa Rica’s wors­en­ing fis­cal sit­u­a­tion include tighter reg­u­la­tory con­trol over gam­bling and an extra 2 per­cent tax on the gross rev­enues of all gam­ing oper­a­tors estab­lished in the coun­try, finance min­is­ter Guillermo Zuñiga announced ear­lier this week.

Speak­ing at a press con­fer­ence in Costa Rica’s cap­i­tal, San José, Zuñiga stated that the gov­ern­ment would intro­duce a new gam­ing bill for dis­cus­sion in the country’s par­lia­ment, per­haps as early as this August.

Zuñiga said the 2 per­cent gam­ing tax on gross gam­ing rev­enues would allow the gov­ern­ment to gen­er­ate US$85m per year in new rev­enues. The pro­posal comes as Costa Rica attempts to address a fis­cal sit­u­a­tion that has seen gov­ern­ment rev­enues drop eight per­cent dur­ing the first-half of the year, with expen­di­ture ris­ing by more than 20 per­cent. Pro­jected GDP growth for the year has also been low­ered by the country’s cen­tral bank. Under the fis­cal plans, the gov­ern­ment will also intro­duce US$112m worth of pub­lic spend­ing cuts.

The finance min­is­ter said the gam­bling bill would include steps to estab­lish a new gam­ing reg­u­la­tor under the con­trol of var­i­ous gov­ern­ment depart­ments. The reg­u­la­tory body would be charged with issu­ing licences to gam­ing com­pa­nies and ensur­ing their com­pli­ance with leg­is­la­tion. The new regime will apply equally to online bet­ting oper­a­tors, and the country’s 35 ter­res­trial casi­nos, accord­ing to local news­pa­per reports.

Zuñiga refuted any notion that Costa Rica’s move to tax and reg­u­late gam­ing was related to the country’s inclu­sion along­side Uruguay, Malaysia and the Philip­pines on a list of coun­tries that failed to meet inter­na­tional tax stan­dards that was pub­lished by the Paris-based Organ­i­sa­tion for Eco­nomic Co-operation and Devel­op­ment (OECD) in April 2009. Zuñiga this week described the Costa Rican government’s gam­bling plans as falling within a “global ten­dency” to reg­u­late gam­bling activities.

Costa Rican casi­nos were made subject to more strin­gent licens­ing require­ments just last year. How­ever, an April 2009 report from global anti-money laun­der­ing (AML) watch­dogs the Finan­cial Action Task Force (FATF) crit­i­cisd the Costa Rican gov­ern­ment over a fail­ure to apply more effec­tive AML con­trols to its gam­ing sector.

The report said such pro­to­cols “appear to be lack­ing in Costa Rica, El Sal­vador and Nicaragua despite recent attempts by their respec­tive gov­ern­ments to bet­ter con­trol and reg­u­late the industries”.

Costa Rica has also played a cen­tral, if con­tro­ver­sial, role in the devel­op­ment of the global online gam­ing sec­tor. A num­ber of the most promi­nent names in the remote gam­bling indus­try have at one time or another installed offices or call-centres in the Cen­tral Amer­i­can coun­try, despite the fact that the activ­ity has never been for­mally reg­u­lated under Costa Rica’s gam­bling laws.

There are cur­rently around 250 inter­net gam­ing firms reg­is­tered in Costa Rica, accord­ing to the US State Depart­ment. At present, these com­pa­nies are not sub­ject to either gam­ing taxes or spe­cific licens­ing fees, although they are for­bid­den from accept­ing bets from Costa Rican residents.

Sev­eral pre­vi­ous attempts have been made to estab­lish tighter con­trols over online gam­ing in Costa Rica.

A tem­po­rary law passed in 2003 required all inter­net gam­bling com­pa­nies to be for­mally reg­is­tered with the government’s finance min­istry, while sev­eral other bills pro­posed by politi­cians to impose stricter reg­u­la­tions on Costa Rica-based oper­a­tors have stalled in the country’s leg­isla­tive assembly.

Zuñiga said he was con­fi­dent that the government’s lat­est ini­tia­tive would receive par­lia­men­tary back­ing, though he acknowl­edged that the gov­ern­ment had yet to sound out its Lib­er­tar­ian Move­ment coali­tion part­ners over the gam­bling plans.

Costa Rica’s stock as an online gam­ing juris­dic­tion has fallen sig­nif­i­cantly since the United States’ clam­p­down on US-facing gam­ing web­sites that has encom­passed both the 2006 pas­sage of the Unlaw­ful Inter­net Gam­bling Enforce­ment Act (UIGEA) and the col­lapse of Costa Rica-based and London-listed oper­a­tor Beton­Sports just a few months later.

Beton­Sports’ former-chief exec­u­tive David Car­ruthers has now pleaded guilty to vio­la­tions of US gam­bling law fol­low­ing his 2006 arrest in Dal­las in tran­sit between Lon­don and his home in Costa Rica, while the company’s founder, Gary Kaplan, is due to stand trial before a fed­eral court in Mis­souri later this year.

A num­ber of gam­ing com­pa­nies, such as Sport­ing­bet, have also moved their prin­ci­pal oper­a­tions away from offices in Costa Rica as they have with­drawn from the US mar­ket and come to favour bases with closer links to the online gam­ing industry’s core mar­kets in Europe and, in par­tic­u­lar, the UK.

How Costa Rica’s new rules will be applied to those inter­net gam­ing firms still based in the coun­try is not yet clear. Accord­ing to local media reports, they could see the Costa Rican gov­ern­ment mimic tougher restric­tions that have been put in place in Antigua & Bar­buda in recent years. Antigua was admit­ted to the UK government’s ‘white list’ of approved online gam­ing juris­dic­tions in Novem­ber 2008.

Rep­re­sen­ta­tives from Costa Rica’s land-based sec­tor are said to broadly wel­come the plans to impose stricter licens­ing and reg­u­la­tory con­trols on gam­bling busi­nesses. How­ever, a spokesman from the Costa Rican Casino Asso­ci­a­tion ques­tioned the wis­dom of hit­ting casi­nos with higher tax bur­dens when casi­nos, too, were suf­fer­ing as a result of the country’s eco­nomic dif­fi­cul­ties. The government’s plans to limit casino open­ing hours were shelved ear­lier this year on oper­a­tors’ con­cerns.