Financial results of Montevideo casinos generated controversy

A USD 10 million deficit was suffered by Montevideo Casinos within the conduct in government of Mayor Ricardo Ehrlich, according to statements by the opposition. The local council rejected these numbers and announces a restructure in games of chance.

According to legislator Álvaro Viviano, casino losses are comprised by two aspects: cumulative deficit from 2005 up to date and expenses from Ehrlich administration in order to facilitate the retirement of 120 casino workers. Each officer received USD 45,000 in 24 installments before retiring, informed the casino trade union.

Both the opposite political parties and workers agree when they say that the aim of the council is to privatize casinos. First, they assure, it „privatized“ Carrasco Hotel Casino and then Parque Hotel will be relocated to Casa de Andalucía, where it will „decrease“ the gaming activity so the council „may have reasons” to take them out of the council area of influence.

According to statistics handled by the trade union, gross income of casino in Montevideo City Council (IMM) in 2008 decreased a 20% regarding last year, In 2007, the average incomes of the casinos were USD 31 million a month, while on the current year, the average was USD 25 million a month.

According to data presented by Viviano, local casinos lost USD 1.5 million in 2005, USD 2 million in 2006 and USD 500,000 in 2007. The number brought by Viviano is USD 4 million in total, plus USD 7 million by the retirement plan of workers. Of those USD 11 million, USD 1 million have to be taken, because the council says it was the casino revenue in 2007. This information was brought by the manager of Montevideo Casinos, Hugo Gandoglia.

According to Gandoglia, the improvement in the casino income has to do with the application of measures announced by Mayor Ricardo Ehrlich in October 2005.

„A USD 500,000 were delivered in 2007 and have to do with the Montevideo casinos deficit“, explained Viviano, who said that the council developed a retirement plan for 120 workers, that cost USD 7 million.

Viviano affirmed that former director of Montevideo Casinos, Juan Carlos Bengoa –today in prison- lost USD 15 million in five years. Ehrlich has USD 10 million deficit in a shorter period. He added that the change in the employment team is the only variable developed by IMM to improve the casino business. A similar option was presented to the trade union.

President of National Federation of Casino Workers, Fernando Godoy, said: „It is probable that the City Council had an income of USD one million. However, it is not due to an increment of gambling but due to savings in the payment of salaries”, he added.
However, Godoy agreed with the opposition that the city council made a millionaire investment in order to facilitate the retirement of 120 casino workers.

Montevideo Casinos were the first to operate in Uruguay. They have two gambling venues: in Parque Hotel and Casino Carrasco. In 1994, it started to incorporate games of chance machines as a direct investment from IMM.

In 2002, it partially refurbished the machines because they were obsolete, and it expands, through the leasing of machines to third parties, so the city council received a fee for the hiring of slots.

In 2006, the opposition pointed that Montevideo Casinos, during the conduct in government of Juan Carlos Bengoa (2000-2005) lost USD 15 million. In December 2007, former director Bengoa was sent to prison together with two of his assistants, and in January 2008, IMM announced a change in the slot management system. Recently, the City Council decided to grant to private companies the operation of Carrasco Hotel Casino and to move the facilities to Parque Hotel.

„WIth the aim to change the casino situation, commercial management was improved and human resources were nationalized. (…) An analysis of the personnel was performed in seach of a new model. Besides, management was monitored,” pointed Luis Polakof, of IMM Financial Development. Besides, Alvaro Viviano –Legislator from Partido nacional- commented: „With Bengoa as casino director, the council lost us$ 15 milloion in five years. With Mayor Ehrlich, USD 10 million have been lost in three years and a half. What has changed from Bengoa up to the moment?.”