Did Enjoy inflate revenue estimates?
Chilean casino operator Sun Dreams has filed two appeals before the Santiago Appeals Court against the Chilean Gaming Board, disputing the board’s decision to award a casino license in Pucón and Puerto Varas to its rival, Enjoy SA.
Sun Dreams says Enjoy used flawed technical criteria to reduce the costs and forecast greater profit for the two projects. In court, Sun Dreams argued, “The awarded bidder has submitted a project with lower associated costs, which allowed it to present an economic offer of greater value than that offered by this party, which ultimately determined the decision of the contest in its favor. This is because the economic offer is the determining factor for the granting of a casino operating permit.”
According to CDC Gaming Reports, Sun Dreams says in Pucón Enjoy did not meet the minimum requirements for a four-star hotel. In Puerto Varas, the company claimed, in addition to other problems, the time needed to add a new casino to the existing hotel would be greater than that proposed in the tender.
In June, Enjoy won four licenses out of five, and Sun Dreams picked up the other. In July, Enjoy said it plans to invest as much as US$116.7 million in the next three years in the municipal casinos of Viña del Mar, Pucón, Coquimbo and Puerto Varas.
Meanwhile, Chile is offering a revised tender for two municipal casinos. Superintendencia de Casinos y Juegos (SCJ) which oversees casinos, offered a tender last month for seven casinos.
The licenses for Arica and Puerto Natales received no bids. Vivien Villagrán Acuña, superintendent of SCJ said it is working with the two communities to redraft the special conditions for the tenders. One condition for Natales, for instance, required putting in an events center.
A spokesman for the Chilean Casino Association said the changes are required to make the licenses attractive to operators.
“If the process repeats with the same requirements, it will once again fail to attract interest,” said the spokesman. “We can’t describe the municipal license tender as successful given that it only had two bidders: Enjoy and Sun Dreams. For this reason, I believe that we must change the whole licensing system looking forward to the next concession renewal.”
The mayor of Arica, Gerardo Espindola, said it was important for the city not to lose the casino, which is a source of income and which provides jobs.
