Owners and workers of nine bingos and casinos on Margarita Island, off Venezuela's coast in the Caribbean, threatened to close from zero hours as a measure to protest against the new Gaming Tax which commences today. According to the president of Bingo Las Vegas, they hope that the strike measures on Margarita help to spread the closure action throughout the country and take the industry's case to the Supreme Court to change the law.

The new gaming tax law has increased tax over a thousand-fold, especially for casino table games and slot machines that are also available in bingos in the country. As from now, each table game is taxed between US$2,100 and US$5,600 per month, while slot machines will pay between US$1,750 and US$3,500 per month, placing slot machine tax at around US$58-188 per machine per day. This is one of the largest tax hikes in the world.

The tax increase debate has been going on for the best part of a year, since Representative Hiroshima Bravo suggested even higher gaming taxes based on hearsay and the gross misreading of local slot stats. In the meantime, tax authorities had promised that tax increases would be 'sensible'. However, vociferous tirades against casinos as 'centres of corruption' by President Hugo Chavez pushed the balance in favour of such tax increases.

We have had reports from Venezuela that the Margarita strike protests will spread throughout the country. In our opinion such measures would play straight into the hands of Chavez's doom and gloom casino attacks. Both operators and workers should seek to change the gaming tax law through the Courts, and seek injunctions against the new tax law as a matter of urgency.

Of course, serious investors in the Venezuelan gaming industry are furious, because what the tax law does is drive small operators underground. One gaming executive said: "If the government continues with this ridiculous law then this entertainment industry will be driven underground. This government has already allowed many illegal gambling operations, operations that don’t pay tax or subscribe to any law."

What these new measures do to the industry is to negate the existence of smaller operators, who now need in excess of US $80 per day per machine to be able to subsist. Failure to generate these revenues would ensure closure of such businesses, with the result of some going illegal and turning operators into criminals, similar to the online gambling industry in the US.

Prohibitive laws are often enshrined by paranoid rulers and, whether he wants it or not, President Chavez is emulating his nemesis President Bush as he attempts a paternalistic approach that died with the tin-pot dictators of the last century. If President Chavez wishes to implant a socialist doctrine in his country, then he must start with the basic culture of respect for honourable endeavour that is of benefit to society.

The gaming industry as a whole is not made up of gangsters and criminals but of people who work for a living with dignity, and operators who seek a rational legal framework to protect their investment. You can find gangsters and criminals in most other industries, whether they are in banking, finance, petrochemicals, pharmaceuticals, insurance, the clergy or the armed forces, but the gaming industry is far too well regulated to cosset such elements, if they exist, for long. (E-05.01.07)

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