The Future of Land-Based Casinos in Ecuador: A Legislative Challenge
The debate around the potential reopening of land-based casinos in Ecuador remains alive, albeit facing hurdles as the December referendum approaches.
Ecuador’s constitutional court recently dismissed a proposal aimed at including this issue in the upcoming referendum. This question was part of a broader set of inquiries presented by President Daniel Noboa on August 5, with the last query specifically addressing the revival of land-based casinos.
Ecuador stands out for its regular use of referenda, allowing citizens to weigh in on a diverse set of issues ranging from security to fiscal policies. Such democratic engagement is intended to empower citizens, enabling them to influence significant legislative matters.
The backdrop to this discussion lies in a 2011 referendum that prohibited casinos in Ecuador. President Noboa’s proposal sought to reactivate these venues, suggesting that they be situated within five-star hotels and taxed at a rate of 25%. The tax revenue, as proposed, would significantly fund initiatives aimed at improving school meal programs and combating child malnutrition.
However, the constitutional court determined that the proposed question lacked clarity, which could mislead voters about its implications. The court identified two key issues: Firstly, the preamble failed to provide sufficient clarity, potentially confusing voters. Secondly, the proposal intertwined three distinct subjects—the reopening of casinos, a new gambling tax, and the allocation of tax revenues—restricting voters’ ability to express nuanced opinions.
Despite this setback, there remains room for revision. The court’s ruling indicates that the proposal could be amended to comply with Ecuador’s constitutional guidelines and potentially be presented to voters later. In its statement, the court emphasized the importance of formulating constitutional amendments and referendum questions with transparency to uphold democratic integrity.
Challenges Persist for Casino Regulation in Ecuador
This latest decision marks another setback in President Noboa’s ongoing efforts. Earlier this year, he withdrew a similar question intended for a 2024 referendum due to rising civil unrest, prioritizing issues such as combating organized crime instead.
Conversely, the online gambling sector in Ecuador continues to evolve. In the first half of 2024 alone, 65 companies registered to comply with a newly implemented 15% gross revenue tax, effective July 1 of the previous year. Additionally, player winnings are now subjected to a 15% withholding tax, demonstrating a shift in the country’s approach to gambling regulation.
As Ecuador navigates these complex issues, the future of land-based casinos remains uncertain, reflecting broader societal challenges and the ongoing negotiation between public opinion and legislative processes.