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Legalized gambling could weaken Margarita duty-free lure
Impact International / April 1, 1997

By Larry Luxner

CARACAS -- Venezuela, the only major Caribbean Basin country without legalized gambling, may pass a proposed casino law as early as April. While that could boost overall tourism figures, some observers say it could divert domestic tourism from Isla Margarita, Venezuela's duty-free paradise.

A bill now being debated before Venezuela's Congress would permit casinos only in five-star hotels of at least 200 rooms each. Under the proposal, the only exception to this new law would be the relatively small Hotel Humboldt on Mt. Avila overlooking Caracas; officials agree that, because of its unique location, it would be difficult to privatize this government-owned property without the attraction of a casino.

At present, gambling is tolerated only on Isla Margarita, even though it's technically a violation of the Venezuelan constitution. Enrique Nuñez, president of Alphatropolis and a former vice-president of the Chamber of Deputies' tourism committee, explains why.

"In 1992, the first bingo hall and slot machines were established on Margarita. President Carlos A. Pérez closed the bingo because it was illegal, but the owners went to court and got an injunction which said they could continue operating until there was a law regulating casinos," he said. "A precedent was established, and after that, others came."

In 1996, according to Tourism Minister Hermann Luis Soriano, 750,000 foreign visitors came to Venezuela; 35% of them headed for the beaches of Margarita.

"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 Gonzalez, director of the Venezuelan Association of Five-Star Hotels. "The implementation of casinos should be subject to only one law, and not regional criteria. The problem is bureaucracy. The casino is one more service, but not the principal motivation of tourism."

Asked why casinos will be restricted only to five-star hotels, Gonzalez replied: "To prevent the proliferation of small casions with no guarantee of seriousness or honesty."

Nuñez said the Senate accepted changes to the proposal last November, and that the final bill will be included on the agenda anytime between Mar. 1 and Jun. 30.

"The church was initially against the bill when it was first proposed three or four years ago," he said. "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 who will lose. They've successfully delayed the law for two years."

Yet Peter Gutierrez, marketing director at United Distillers de Venezuela, points out that making casinos legal everywhere in Venezuela would dilute Margarita's allure, at least among domestic tourists. "Anything that would energize on-trade consumption or tourism would be helpful. But the casino law would hurt Margarita in that people wouldn't need to go there anymore to gamble. They go there more on holiday."

On Margarita, long marketed as a duty-free paradise, liquor costs 20% to 35% less than on the Venezuelan mainland. Gutierrez noted his company does "a significant amount of business" there, but declined to say how much.

"Venezuelans go to Margarita on holiday, which they do more than they used to since they can't travel as much overseas. During the first half of the crisis, Margarita enjoyed an upswing in Venezuelan tourism," said Gutierrez, adding that fewer Venezuelans are going there as the crisis continues.

Nuñez concedes that legalized gambling will undoubtedly lure some visitors to Venezuela, though he isn't convinced it'll make much difference in the end.

"I think it'll help. It's an additional service," he said. "But will it boost tourism dramatically? No way."

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