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Archive for March 21st, 2019

Portuguese Government Initiates Gambling Tax Review

Portugal’s heavy gambling tax to finally be reviewed by the government as the local regulated market faces channelization issues

The government of Portugal has tasked a working group with analyzing the state of the country’s online gambling industry and assessing whether changes in the way gambling services are taxed should be implemented, local media oulet Infocul reports.

Portugal’s new gambling law took effect in 2015, but it was not before the spring of 2016 that the actual process of reorganizing the local market commenced. The nation’s gambling regulator Serviço de Regulação Inspeção de Jogos (SRIJ) issued a first license to an interested foreign company in May 2016 to mark the start of a new era in the provision of regulated gaming and betting services to Portuguese customers. The regulatory body has issued a total of 16 licenses since then.

The specially assembled work group is composed of six members, including representatives from SRIJ and Portugal’s Ministries of Finance, Economy, Tourism, and Labor. They will have 30 days to review the nation’s current gambling taxation regime and present the government with its findings and proposals for potential changes in how gaming and betting services are taxed.

While the reorganization of Portugal’s market was generally welcomed by EU authorities and industry stakeholders, the country’s taxation regime was heavily criticized and rates were deemed too high to offer viable prospects for the nascent market.

Under Portuguese law, online sports betting services are taxed at between 8% and 16% on turnover, while online casino games and poker licensees pay a 15% to 30% tax on their annual revenues. Licensed operators have complained consistently about the tax rates over the course of the past years, arguing that they were unnecessarily high and that they would impact player channelization in an extremely negative manner.

Is It The Right Time For Review?

Responding to the complaints, the government has said that it would review the newly implemented regulatory framework two years after the first license under the new regime was issued. It has been nearly three years since SRIJ awarded that first license, but it seems that the government might finally be ready to reconsider the current tax rates.

According to a recent report by Eurogroup Consulting, the greater portion of online gambling activity still happens on the black market. The report shows that more than three-thirds of all wagers are placed with unauthorized operators. In other words, the local regulated market has clearly failed to draw players from the unregulated gambling space and channelization is a serious issue in the country.

Proposals for a change in the current taxing regime emerged late last year. Some lawmakers suggested that the current taxation system be replaced by a flat tax rate of 25% on revenue for all forms of online gambling. The Special Online Gambling Tax mulled by Portuguese legislators was supposed to be tacked onto the country’s budget plan for 2019. However, the final version of budget did not include those proposals.

According to analysts, it might not be the right time for a review of the nation’s gambling regulatory framework due to the legislative election this October.

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Casinos Splitting from NV Energy Could Be Imposed Higher Impact Fees

Nevada’s public utility calls for higher impact fees to be imposed on departing corporate customers

Major companies leaving NV Energy could be required to pay a higher “impact fee” if Nevada regulators agree to consider the state public utility’s recent call for the formula used to determine said fee to be substantially restructured, The Nevada Independent reports.

Under a 2001 law, large power users can be allowed to split from NV Energy as long as the Nevada Public Utilities Commission rules that the departure would not harm public interest. In addition, such users should pay an exit fee or impact fee that is determined by the commission. The fee is used to reimburse remaining residential customers for the investments NV Energy has made for its larger consumers.

NV Energy said in an “alternative impact analysis” submitted to the Public Utilities Commission last week that the formula the regulator uses to determine the exit fee should be changed. The public utility further said in its analysis that it could lose millions of dollars as a result from the departure of a number of large commercial and industrial customers, if no changes are implemented in due time.

NV Energy also pointed out that its remaining customers will have to pay base tariff general rates $17 million higher than they would have had been charged in the next general review proceeding and $30.3 million higher in the subsequent general rate review proceeding, if the contested formula remains the same.

Extending the Time Period for the Impact Fee

NV Energy is urging the utilities regulator to extend the time period for which the exit fee is calculated from six years to 18 years, and to also extend the time period for non-bypassable charges from six years to nine years.

Nevada’s public utility is also challenging the contemporary interpretation of the 2001 law that requires an entity’s departure to be only approved if “the public interest” is not harmed. NV Energy pointed out that the law was adopted to help it cope with the extremely high demand for electricity, which it was not able to meet at the time. The first companies that split from the utility did so to built their own power plants. However, NV Energy noted in last week’s analysis that more recent businesses have opted to leave have contracted with alternative power suppliers.

NV Energy submitted its analysis as part of the application of South Point Hotel and Casino in Las Vegas to split from the utility. A number of major casino companies have left NV Energy’s electric service in recent years, including MGM Resorts International and Caesars Entertainment Corp.. Las Vegas Sands also filed an application a few years ago, but withdrew it as it deemed the impact fee it was required to pay too high. MGM paid an exit fee of $86.9 million in 2016, while Caesars was charged a $47.5 million fee the following year.

A record number of ten businesses filed to leave the utility last year, with some of those being SLS Las Vegas, Boyd Gaming, Grand Sierra Resort, as well as the Raiders stadium, currently under development in Las Vegas.

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Culinary Workers Hold Nationwide Pickets to Support Palms Casino Unionization

First wave of pickets supporting Palms unionization to target celebrity chefs and businesses associated with the casino’s owners

Culinary workers will organize nationwide pickets at properties associated with Palms Casino Resort in Las Vegas to support employees at the resort in their long-year unionization effort, it became known Tuesday.

Workers at the Palms voted last spring to unionize, but the hotel and casino resort has refused to respect their overwhelming vote and start contract negotiations. Under federal law, “secondary” picketing can be organized for the purpose of urging an employer to honor its staff’s choice to unionize through an election held through the National Labor Relations Board.

The Culinary Workers Union Local 226 and Bartenders Union Local 165, known to be Nevada affiliates of the UNITE HERE labor union, announced that a first wave of pickets will target celebrity chefs Marc Vetri and Michael Simon, Michelin-starred Tim Ho Wan Dim Sum restaurant in New York, and partners of Fertitta Capital, the private investment vehicle of the owners of the Palms, among others.

The picketers will demand that the targeted restaurants and other businesses use their relationship with Palms officials to convince the casino resort to honor its employees’ choice to unionize and to begin negotiations with unions.

Demands for Higher Standard amid Expensive Renovation

Palms Casino Resort originally opened doors on the Las Vegas Strip in 2001. After financial troubles fueled by the Great Recession and several changes of ownership, the property was eventually purchased by Station Casinos in 2016 for $313 million. The Palms’ new owner pledged a $600-plus-million investment in renovating and upgrading the resort.

The first renovated facilities were launched last spring. More amenities have been unveiled over the past year, including the two-story Empathy Suite designed by British artist Damien Hirst, which at $200,000 for a two-night stay is touted as one of the world’s priciest accommodations. The renovation project is expected to be completed by the end of the year.

Commenting on the upcoming pickets, Eduardo Truebas Martinez, a cook at the Palms’ A.Y.C.E. Buffet, has said that employees at the property voted to unionize because they wanted “the same standard” as the rest of the unionized workers at the Las Vegas Strip, including “fair wages, job security, great health benefit.”

Secretary-Treasurer for the Culinary Union Geoconda Argüello-Kline has said that it is time that Palms began contract negotiations and that their union has been certified as the bargaining representative after Palms workers voted overwhelmingly in favor of union representation in a free, fair, and National Labor Relations Board-approved election.

The first pickets are expected to take place in San Francisco, Washington D.C., New Haven, Cleveland, and Philadelphia, among others.

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Blackstone Snatches Ukrainian Social Casino Games Developer Murka

The Blackstone Group shows ambitions toward the exploding social casino market with strategic acquisition of Ukrainian game developer

American private equity firm The Blackstone Group LP has developed further interest in the global gaming industry, this time focusing its attention on the lucrative social casino sector. The company is ramping up preparations for the acquisition of Ukrainian social casino games developer Murka.

Ukrainian news outlet the Kyiv Post reported citing a statement by Blackstone published earlier this week that the acquisition will be carried out through a special purpose vehicle set up to complete the transaction. Tribe Cyprus Bidco Ltd will buy the assets of Murka Ltd and Murka Entertainment Ltd. on behalf of Blackstone. The US firm is awaiting approval from the Commission for Protection of Competition of the Republic of Cyprus to move forward with finalizing the transaction. The purchase price has remained undisclosed.

Since established in 2011, Murka has been developing casino-themed social games. The company currently employs more than 100 people at its offices in the Ukrainian capital Kyiv, Dnipro, and Lviv. According to the company’s website, its games are played by more than 5 million players monthly. Murka’s titles include Vegas Slots, Royal Fortune Slots, Scatter Slots, and Slots Journey 1 and 2, among others.

A recent report by AppAnnie showed that Murka was one of the fastest growing companies in the CIS region.

Blackstone’s Social Gaming Interest

Blackstone’s acquisition of Murka will enable the US alternative asset manager to extend its foothold into the lucrative global social casino market. Social casinos were estimated to be a $3.8 billion sector in 2016. The market is expected to reach $4.6 billion by the end of the decade.

Generally speaking, social casino games imitate the experience offered by real-money online casinos. Social casino games are free-to-play, meaning players are not required to wager actual money to play. Games of this type generate revenue through in-app purchases of virtual chips and other products that can enhance player experience, or by placing advertisements within the app.

It should also be noted that The Blackstone Group is no stranger to the gambling industry. Last spring, the private equity firm bought Spanish gambling giant Cirsa. Terms of the deal were not disclosed, but sources had claimed that the Barcelona-based group could snatch between €2 billion and €2.5 billion from its buyers.

In May 2014, the Blackstone Group acquired The Cosmopolitan of Las Vegas, a luxury Strip hotel and casino resort. The company paid $1.73 billion to purchase the property from its former owner, Deutsche Bank. Reports emerged late last year that Florida-based gaming and hospitality company Hard Rock International had entered due diligence to buy the Cosmopolitan. Blackstone denied those reports, saying that there were no discussions regarding the sale of the resort at the time.

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