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Buenos Aires Gaming Dragged Into Political Standoff

The nationalisation of the Argentine casino sector seems to be firmly on the agenda of the country’s President, Cristina Fernández de Kirchner (as GBGC has written about previously). This would be in keeping with government policy which has moved power away from the private sector and put it in the hands of the state. The seizure of Spanish-owned YPF, the country’s biggest oil company proved popular with most Argentines and proved a shrewd political move for the President. The President also seems eager to cut the ties between her and her late husband’s connections with local “gaming tsar” Cristóbal López who has a large stake in the racino in downtown Buenos Aires and the two “floating casinos” docked permanently to the harbour.

It was initially believed that it would be some time before the government acted on the issue but events have taken a swift and unexpected turn due to the deepening economic crisis in the province of Buenos Aires. With a rising deficit, in July 2012 the province of Buenos Aires saw a number strikes led by teachers and other state workers over the government’s failure to pay the first of two annual bonuses on time. These bonuses were first put in place by the administration of Juan Domingo Perón and combined add up to an extra month’s salary per year. Due to the crisis governor Daniel Scioli announced on 16 July 2012 that the government would only be able to pay the bonus in five instalments which led to further strike action across the province.

Part of the problem has been the national government’s withholding of funds earmarked for the province. Relations between the national government and the government of Buenos Aires have become increasingly strained of late with President Kirchner hinting that the governor should make changes such as raising taxes and introduce austerity measures. While Kirchener’s criticisms of Scioli have been largely veiled, her supporters have been far more outspoken claiming that he has mismanaged the economy and that his ideals are out of step with the far more left wing politics of the Kirchner camp.

This is a far cry from 2003 when Scioli and Néstor Kirchner won the presidential election on the same ticket with Scioli standing for vice president. Nestor Kirchner died of a heart attack in 2011 and since then relations between Scioli and Cristina Kirchner have become increasingly strained. Rumours of a split first emerged when Scioli announced that he would be standing for President in 2015. Although legally Kirchner can only serve two terms as President she may move to change the constitution so that she will be able to stand for a third term.

While the government eventually provided the province with 25% of the amount to meet the mid-year bonus Scioli argued that it still wasn’t enough. In order to “ensure the sustainability of provincial finances” and prevent further strike action Scioli was forced to turn to another source of income: the gaming industry. On 22 July 2012 Scioli signed a decree which ratified the decision of the Provincial Lottery to extend the licences of 14 of the 46 bingo halls which operate in the province – the licences of which all expire in 2013 and 2014. Bingo halls in Argentina all house slot machines and in many cases, especially in the province of Buenos Aires, can be large scale. All licences are renewed until 2027.

In all the “special fixed licence fee” will amount to 1.1bn pesos (around $240m). Initial tax revenue for licensing fees comes in the form of a payment of 600 million pesos (around $132m) all payable before 3August 2012 with the remaining amount to be paid in instalments. With this amount along with a government sponsored loan Scioli was able to raise the mid-year bonus for the almost half a million civil servants. Crucially it also makes the province less reliant on federal government money and reduces Scioli’s dependence on the Kirchner administration.

Almost immediately Scioli’s actions came under a barrage of criticism from the Kirchner camp inside the province. On the very day the decree was signed it was announced that Provincial Deputy, and Kirchner supporter, Mario Caputo would put a project before the House Assembly which would effectively make Scioli’s recent actions void.

The proposal seeks to make the operation, control and management of bingo halls and all gaming in the province state run while the granting of licences to private run entities would be illegal. “If YPF has been nationalised,” the legislator argued, “why can’t we nationalise gambling?” Caputo is the close political ally and previous spokesman for Minister of Interior Florencio Randazzo another keen Kirchner supporter who has also proposed making all gambling in the province state run.

Ideologically the transfer of gambling to the state seems to be gaining ground in the Kirchner camp. Even before the recent rising tensions with Scioli the party was looking into the issue of gambling and the possibility of nationalising casinos and other gaming establishments.

Although Kirchner has not spoken publicly on the issue it is clear that the gaming industry looks set to be a further point of contention between the two camps. As these tensions rise the nationalisation of the industry could well be used as a mechanism to further undermine Daniel Scioli and his administration. At the moment legislators are just returning from their winter vacation. So for now it remains to be seen just how quickly proposals to nationalise gaming in the province gain ground now that the government is back in session.

 

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