March 12, 2014
Judge suspends casino debt waiver
Liberatori grants injunction against City regulation that benefits Cristóbal López
A judge yesterday suspended part of an agreement passed last December 9 in the Buenos Aires City Legislature that exempted gaming czar Cristóbal López from paying gross revenue taxes.
City Judge Elena Liberatori ruled in favour of suspending article 3.2 of the deal, which was approved by PRO party and Victory Front (FpV) lawmakers in a 15-minute session and that granted gambling companies a debt relief of almost two billion pesos.
The lawsuit questioning the agreement had been filed by constitutional lawyer Andrés Gil Domínguez.
As a provisional response, Libe-ratori decided to cancel the proposed debt waiver “until the underlying issue is resolved,” Gil Domínguez told the Herald.
The deal sponsored by City Mayor Mauricio Macri “does not respect articles 17 and 50 of the City Constitution (which regulate gambling in the City) that establish the revenue from these activities should go to social development programmes,” the lawyer added.
The questioned accord drops any future claims over such revenue.
Now the City administration has 10 days to defend the deal before the judge, who could very well rule against the constitutionality of the agreement.
“We need to see how long the PRO is going to hang on to this agreement. The decision to maintain it is coming at a big political cost,” former Civic Coalition (CC) City lawmaker Facundo Di Filippo told the Herald.
Several years ago, Di Filippo — along with former CC lawmaker Diana Maffia — filed an accountability request for the City to force it to reveal gambling figures which have never been officially published. As a response, the City Gambling Institute (IJACBA in Spanish) revealed that in 2010 slot machines in Palermo and Puerto Madero had received bets for 33.667 billion pesos — a figure that is larger than the 2012 City Budget.
Long story short
Since it gained its autonomous administration in the mid-90s, the Buenos Aires City has been claiming the rights to control a series of activities, such as the police, the subway — and gambling.
Until then, gambling activities were supervised by the National Lottery, but legal disputes arose over who had the right to manage (and tax) them.
In 1999, the administration led by then-president Carlos Menem allowed the opening of the so-called Floating Casino of Puerto Madero, arguing the ships docked in the city’s port were located on “national waters” — not the City limits.
Four years later, former and late President Néstor Kirchner signed a landmark agreement with then-Mayor Aníbal Ibarra to share taxes over this business, which was consolidating its expansion thanks to the parallel authorization to install slot machines in the Hipódromo de Palermo horse tracks.
The deal established the City would receive 35 percent of the tax revenues from gambling machines, while the rest would go for the Ministry of Social Development under the federal government.
Slot machines in Palermo were run by businessman Federico de Achával and Cristóbal López, a gambling czar born in Chubut who opened several casinos in the Santa Cruz province under the rule of then-governor Kirchner. Around the same time, Spanish company Cirsa — who owned the Floating Casino — sold 51 percent of its business to López.
In late 2011, the Supreme Court allowed the City government to claim unpaid taxes — including those owed by the Floating Casino — but the PRO administration decided to automatically renew the deal.
On November 1, PRO bloc leader Cristian Ritondo held a meeting with opposition party leaders and announced the local administration would follow that path.
However, one month later Macri sponsored a new agreement for which the City would receive an additional 300 million pesos from operators — but guaranteeing López that he would still be exempt from paying the gross income tax on slot machines, a business that moderate estimates put at 1.8 billion pesos throughout the length of the concession.
In 2007, five days before leaving office, Kirchner signed a decree extending the licence of the Palermo racetrack until 2032. This month’s deal — passed with support from both Kirchnerite and PRO lawmakers — ratified the benefit.
Judge Elena Liberatori has been at odds with the City government on several occasions. In October 2012, she ordered Education Minister Esteban Bullrich to sit down with secondary school students who were staging sit-in protests at 41 schools throughout Buenos Aires City. One month later, she placed limits on the hotline set up by Bullrich to denounce “political involvement” on school grounds. Earlier this year, Liberatori ordered the Macri administration to provide water and electricity to a sector of the Villa 31 slum.