In April 2012 the President of Argentina Cristina Fernández de Kirchner announced that her government would nationalise Spanish owned YPF, the country’s biggest oil company. Although greeted with cheers and wild applause by the party faithful the act sent shock waves in the markets and led to a swift European Union resolution condemning Argentina’s actions.
The announcement marks the latest in a long line of protectionist moves which has shifted power away from the private sector and put it squarely in the hands of the state. It has led also to growing speculation that the government would soon seek to nationalise other Spanish companies undermining still further the faith of international investors in Argentina’s economic future. So where will the Kirchner administration look to next? According to recent reports it could well be the casino industry, specifically those located inside the capital’s city limits.
In the city limits of Buenos Aires there are three large scale gaming establishments.
These are the racino under the racetrack in the upmarket area of Palermo and the two floating casinos moored permanently alongside each other to the city harbour downtown. The establishment of casinos within the city has long been a divisive and controversial issue with both the city government and the national government vying for control over gaming and fighting over tax income generated by the industry. Under present rules it is the city which takes the lion share collecting around US$70m per year.
Despite the controversy and the long standing acrimony over the issue the possibility that the city casinos could be nationalised under the present administration was almost unthinkable until very recently. This is due to the close ties between the administration and one of the biggest casino and gaming operators in the city, Casino Club, in which a close friend of ex-President Néstor Kirchner reportedly has a 30% share.
Néstor Kirchner, who died in 2010, was a friend of Cristóbal López a self made businessman who first began running gaming establishments in the southern province of Chubut in 1992 and then quickly expanded into the provinces of Missiones, La Pampa, Mendoza and then later Santa Cruz during which time Kirchner was governor.
In 2001 Casino Club was granted permission to run three casinos in Santa Cruz. Two years later once Kirchner was President, Casino Club was granted the right to run the slot machines in the racino in Palermo. Furthermore, in one of his last acts in power before his wife took office Kirchner ordered by Presidential Decree that an additional 1,500 slot machines had to be installed on top of the 3,000 already then in operation. He also extended the licence of the racino for a further fifteen years. Not only does Cristóbal López have a large stake in the racino but in 2007 he bought a significant share of the floating casinos from CIRSA.
Such is his control over the gaming sector in Argentina that he has been dubbed by the local press as the “Gaming Tsar.”
However, things have changed since Néstor Kirchner passed away. While Lopez was once part of the President’s close circle he has now, according to reports in the local media, been completely shut out by Christina Kirchner. He is not alone. The President seems eager to distance herself from her late husband’s business interests and friends whose personal fortunes improved considerably while he was in power.
As Kirchner puts these interests behind her, a young adult movement is looking into the issue of gambling and the possibility of nationalising casinos and other gaming establishments.
Known as “La Cámpora”, the rather sinister group of loyal, almost fanatical, government supporters was founded by Kirchner’s son Máximo Kirchner and is becoming increasingly powerful within the party.
In terms of bolstering Kirchner’s image in the face of inflation, corruption scandals and a recent all out national strike the move could be a shrewd one. Although the nationalisation of YPF was widely condemned outside Argentina locally the majority of Argentines agreed with the President’s decision and it is believed that Argentines would react positively should the casinos in the city be nationalised. It would also be in line with current government policy regarding moving resources away from the control of the city government led by city Mayor Mauricio Macri and placing them in the hands of the national government.
According to a source quoted by journalist Marcelo Canton in local daily Clarin, gaming for the government is now “the next frontier.”
Although not named, the source is said to work for one of the largest gaming establishments and is in close talks with the government over the issue. Canton argues that for now the government is looking at ways to nationalise the casinos in the city and it could later also move to nationalise gaming in the province of Buenos Aires – home to fifteen million people.
Indeed the idea of nationalising gaming establishments in the province of Buenos Aires seems to be gaining ground. According to a plan put forward to the Provincial Assembly by the Civic Coalition Party this month once licences run out for bingo halls and casinos in the province they would not be renewed. Instead each licence would be automatically granted back to the state.
No concrete plans have been announced as yet and any plans to nationalise casinos are at a very early stage. But since the article was published in Clarin other reports have emerged and other significant changes could be on the way. According to an article published in La Voz Online the Cámpora Group is now looking at ways to put in play a gaming law which was first implemented by Juan Domingo Perón in the 1950’s which would create a National Agency for Gaming.
At present gaming licences are granted on a state level but the new act would centralise the industry and all tax income generated by gaming establishments would be divided amongst the states.
News that the government is even considering nationalising the gaming sector is extremely negative for the industry but it coincides with a growing trend in Latin America where operators are being forced out in increasingly left wing jurisdictions. After a referendum in May 2011 Ecuador outlawed casinos, slot parlors and bingo halls and in the case of casinos located in five star hotels did not grant owners time to recuperate their initial investment.
In Venezuela casinos and bingo hall owners have been hounded almost out of existence by the National Commission of Casinos, Bingo Halls and Slot Machines under the Chavez administration leaving thousands unemployed.
It is unlikely that Argentina will go down this road just yet. And if the government does seek to nationalise casinos on a national level it will no doubt meet with fierce perhaps insurmountable resistance from provincial leaders. But as the Kirchner government seeks to deflect attention away from its own failures and gain more tax revenue a bitter battle over gaming in the city limits seems increasingly likely.