Sports Betting in Puerto Rico Looks Like A Winner

A few months ago, we reported on Puerto Rico Governor Ricardo Rosselló taking an ‘aggressive’ approach to sports betting in light of the massive financial upside potential to the island. At the time, we noted that “Puerto Rico’s sports betting proposal appears to be one of the most intelligent set forth in the post-PASPA world. Reasonable taxes, comprehensive offerings and at this point, it appears that the intent is to involve the private sector as much as possible.”

To say that things have gone South for Governor Rosselló since then would be a profound understatement. For one thing, he’s now *former* Governor Rosselló. He resigned in the wake of a massive political scandal becoming the first Puerto Rican governor to leave office in such a manner. To make matters worse, the new Puerto Rican Governor Pedro Pierluisi is having the legitimacy of his office challenged by political opponents, legal groups, etc. He says that he’ll let the court system decide the legitimacy of his claim to the office. Some media outlets aren’t waiting for that to happen–such as Bloomberg who came up with this headline:

MAN CLAIMING TO BE PUERTO RICO’S GOVERNOR WILL LET COURTS DECIDE

GOVERNOR ROSELLO SIGNS SPORTS BETTING LEGISLATION PRIOR TO RESIGNATION

Now the good news–on his way out the door Governor Rosselló signed the ‘Betting Committee Act of the Government of Puerto Rico’ and in the process authorized betting on sports–including eSports–and fantasy leagues for mobile and in-person wagering. Rosselló clearly had his issues but unlike most political types actually paid attention to what worked elsewhere in drafting this sports betting legislation:

“By signing this law, we are getting ready to witness the potential it provides to transform Puerto Rico into a vanguard jurisdiction, while benefitting the local economy. With this legislation, the island will be able to market itself nationally and internationally as an attractive destination for sports betting events,” the governor said via press release.

“We are betting on this emerging industry by allowing betting on its events. This joins the Governor’s Advisory Council on Video Game Affairs [Electronic Game Leagues & Sports Betting] and the incentives for this industry included in the newly signed Incentives Code.”

UNLIKE MOST US GAMING JURISDICTIONS PUERTO RICO RECOGNIZES THE POTENTIAL OF ESPORTS

The awareness of the potential of eSports–as well as the fact that it’s not a bunch of kids betting on video games–is revolutionary in itself. A number of other US jurisdictions have specifically prohibited eSports wagering for reasons that aren’t really clear.

The legislation creates a new regulatory body called the ‘Betting Commission’ which is modeled on other US jurisdictions:

“On the administrative side, the act creates a new Betting Commission, in accordance to the model of other U.S. jurisdictions that have adopted this type of legislation. The commission, comprised of seven members of the public and private sectors, will be the government entity responsible of regulating sports betting, equestrian sports, eSports, and gambling.”

There’s still a lot of details to be worked out but the proposed tax rates are extremely reasonable: 7% for physical bets and 12% for digital bets. Licenses are expected to be somewhere between $2,500 and $50,000 The Weekly Journal had this observation in their report on the legislation:

These charges and taxes seek to be “extremely competitive” to other jurisdictions, with aims to attract investors to an industry that is currently nonexistent on the island.

BUILDING AN INDUSTRY AND HELPING THE BROADER ECONOMY

That’s a novel idea. Instead of soaking gaming companies with ridiculous application fees and tax rates Puerto Rico is looking to build an industry by keeping them reasonable! And attracting investors and outside companies instead of just juicing in cronies? Who would have thunk it!

To their credit, the Puerto Rican plan seeks to help those in declining industries like horse racing and…uh…cockfighting…to transition into a ‘growth positive’ business instead of just subsidizing their existance in perpetuity. Licenses at ‘authorized equestrian agencies’ will have a 50% discount for the first ten years. As far as the former cockfighting pits:

In addition, as a measure to complement the income of individuals who partook in cockfighting, licenses will be authorized to those existing pits to be able to accept sports betting. These licenses will be issued free of charge for the first ten years and the benefit will be applicable to any pit that operated legally prior to the approval of the U.S. Farm Bill, which criminalizes cockfighting.

Depending on the source, there are as many as 150 cockfighting pits on the island. While I’m not an expert on the Puerto Rican cockfighting industry and not exactly sure how this would work you’d have to think that this would be good for a number of ‘independent outs’.

In 1931, the State of Nevada legalized gambling in interest of stimulating the economy and curtailing population flight. At the time, the Southern part of the state–the so called ‘High Desert’ was considered borderline inhabitable due to insanely hot Summers and cold, blustery Winters. Spoiler alert–things worked out pretty well for Las Vegas and the rest of the state. Puerto Rico has set the groundwork that could allow them to become a serious player in the gaming industry of the United States.

About the Author: Jim Murphy

For more than 25 years, Jim Murphy has written extensively on gambling theory and practice. Jim Murphy has been quoted in media from the Wall Street Journal to REASON Magazine. Murphy worked as a radio and podcasting host broadcasting to an international audience that depended on his expertise and advice.