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Venezuela considers taking gamble on casinos
The Miami Herald / April 17, 1997

By Larry Luxner

CARACAS -- Venezuela, the only major Caribbean Basin country without legalized gambling, may pass a proposed casino law as early as next month.

A bill now being debated before the National Assembly would allow slot machines and casinos throughout the country for the first time, but would restrict them -- with very few exceptions -- to five-star hotels of at least 200 rooms each. At present, slot machines are tolerated only on Isla Margarita, an offshore tourist mecca famous for white-sand beaches and duty-free bargains on everything from liquor to perfumes.

"The Venezuelan constitution doesn't permit casinos, but states and municipalities are able to permit it. We want the law so it'll be totally legal," said Luis González, director of the Venezuelan Association of Five-Star Hotels. "The implementation of casinos should be subject to only one law, and not regional criteria."

Asked why only five-star hotels should be allowed to have legalized gambling, González responded: "To prevent the proliferation of small casinos with no guarantee of seriousness or honesty. The casino must be an honest, decent activity."

Enrique Nuñez, president of Corporacion Alphatropolis and a former head of the Chamber of Deputies' tourism committee, helped draft the current legislation. He says his team studied the gambling regulations of 125 states, countries and other jurisdictions -- including Atlantic City and Nevada -- before coming up with its own recommendations. He says his proposal states that if a hotel wants to enlarge its casino area, it'll have to increase the number of rooms proportionally. "If you have a big casino and few rooms, there won't be room for [the casino patrons] to sleep. So the hotels will look for locals."

A deeper problem, he says, is widespread confusion in Venezuela over the legality of casinos.

"In 1992, the first bingo hall and slot machines were established on Margarita. President Carlos Andrés Pérez closed the bingo because it was illegal," he explained. "The owners went to court and got an injunction which said they could continue operating until there was a law regulating casinos. That set a precedent, and after that, others came. But it's still a violation of the constitution."

Under the proposal now being considered, the only exception to the five-star, 200-room rule will be the government-owned Hotel Humboldt. This uniquely positioned property, on the summit of Monte Avila at an altitude of 2,159 meters, overlooks Caracas to the south and the Caribbean to the north.

Inaugurated in 1957, the 70-room hotel functioned for years as a five-star resort before being shut down in the late 1980s; it has since been taken over by the Venezuelan Investment Fund, which supervises the privatization of government assets. Among other things, the property boasts restaurants, a soda fountain, a heated swimming pool, two cable-car systems and even an ice-skating rink.

Comments the U.S. Embassy: "The hotel is scheduled to have a casino once Congress passes the gambling law. Most prospective investors have made passage of the new a prerequisite for bidding. Since the hotel's capacity is small, it will need the additional attraction of the casino to become profitable."

Casinos or no, several Caracas properties are expanding or remodeling, including the Hotel Inter-Continental Tamanaco -- Venezuela's largest hotel -- which is spending over $1 million to refurbish the ninth story and turn its eighth story into an executive club floor. It's all part of an effort to attract guests and return the industry to profitability.

González, whose organization's 20 affiliated five-star hotels have 6,632 rooms between them (out of a national total of 23,000 rooms), says the average occupancy rate for 1996 was only 54% -- due to the country's lingering economic crisis -- and the average tariff came to only $80. Yet rampant inflation has helped make Venezuela a travel bargain for foreigners.

Hermann Luis Soriano, Venezuela's minister of tourism, says 750,000 tourists visited the South American nation in 1996, up from 400,000 in 1993.

"The impressive growth we've had leads us to believe the next few years will bring even greater results," Soriano said during a recent interview at the Hotel Inter-Continental Tamanaco, Venezuela's largest hotel. "Tourism is growing by 12% a year, and should hit one million visitors by 2000."

Soriano said that Isla Margarita now accounts for 35% of all tourist arrivals, though "we have tried to target other, less-known areas of the country. Historically, as a consequence of Venezuela being an oil exporter, it wasn't necessary to develop other sectors of the economy. Tourism was seen as something frivolous, and I think one of the merits of President [Rafael] Caldera is that real alternatives to petroleum have been developed."

He added that "we hope that between now and next year, the remaining 12 hotels in the hands of Corpoturismo will be privatized. The state has proven it's not good at running hotels, so we want to pass that to the private sector and concentrate on international tourism promotion."

Nuñez says legalized gambling will help lure some visitors to Venezuela and away from more expensive Caribbean island destinations. "I think it'll help. It's an additional service," he said. "But will it boost tourism dramatically? No way."

Nuñez added that few people are on record as opposing the introduction of legalized casino gambling in Venezuela.

"The church was initially against it, three or four years ago," he said."But we convinced them of the virtues of the law, that it would restrict casinos and be more fair. Now the only ones against it are those [on Isla Margarita] who will be shut down."

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