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Sportsbooks' Face Controls in Costa Rica

"Liberation Deputy Rafael Arias told The Tico Times this week that the bill obliges sportsbook operators to buy a $150,000 operating license, as well as pay sales and luxury (consumo) taxes and a yearly fee based on the volume of bets they process.

"The industry and its workers currently pay no taxes, and only a reduced amount of the Social Security payroll deductions required of all Costa Rican companies and workers to fund the country's health and welfare programs.

"As a requirement for obtaining their operating license, the companies will have to finance an INTERPOL investigation proving that the bets they process aren't funded with illegal drug money or through other illicit sources. The companies will also be required to present complete accounting reports to local tax authorities.

"…Weeks of debate to follow the bill's presentation next week will probably result in changes to the final document, which will become law when it is published in the government's official organ La Gaceta. Arias insists that the bill is a multi-party effort that reflects a "consensus" in Congress that Internet gambling benefits Costa Rica by providing well-paying jobs to hundreds of bilingual workers. But it must be regulated to ensure that the state gets a cut of the estimated millions in bets processed here each year.

"…Sportsbook companies operate "call centers" in business parks, shopping malls and office buildings around the San José metro area that accept bets on all U.S. sports and soccer, as well as on politics and entertainment, such as who'll win a Grammy or a U.S. presidential debate. Bets pour in from all over the world, but the bulk of business is expected to come from U.S. bettors who place their bets even though gambling is prohibited in their state of residence.

"The companies here process bets, but no money enters the country. Bettors open an account with the companies' offshore banks and bet using their deposited funds by visiting the companies' Web sites or by calling toll-free numbers that are answered by call center "clerks" here.

"Companies accept bets only from clients who have money in their accounts to cover them. Winnings are deposited into the offshore account.

"Some 100 sportsbook companies here could employ as many as 3,000 bilingual foreign and Costa Rica workers, many of whom are university students who would be hard-pressed to earn elsewhere the $600-$1,500 monthly salaries they earn processing bets.

"Deputies questioned this week seconded recent comments by President Miguel Angel Rodríguez and Minister of the Presidency Danilo Chaverri that the country doesn't want to lose these sources of well-paying jobs, but wants to ensure that the companies pay their social obligations and process only "clean money."

"The U.S. Justice Department is keen to crack down on sportsbook betting, an estimated $20 billion worldwide industry, based on U.S. laws that prevent interstate gambling. But it has been unable to stem the flow of bets accepted by companies such as Costa Rica's and some 45 other countries' that don't violate local laws…"

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