Over $1bn gambled per year in Panama as casino industry booms.
Panama City is fast becoming one of the most significant business, banking and tourism centres in Latin America. Since 2006, when the building development and tourist boom first began, the capital’s skyline has changed almost beyond recognition as brand new skyscrapers, international conference centres, luxury condominiums and five-star hotels are erected around the city’s harbour, while tourists have flocked to Panama in record numbers.
In 2007 tourist numbers in Panama shot up by 30 per cent and then increased again by 12.5 per cent in the following year when two million tourists came to visit the country. In order to meet increased demand for tourists and business travellers 15 large-scale hotels are now under construction, the majority of which are dotted around the capital’s coastline.
In 2008 $115.7m was being invested in the hotel sector in order to meet increasing demand. Today there are 4,000 hotel rooms in the capital. In three years’ time, once the new buildings are complete, the number of hotel rooms available in Panama City will increase to well over 7,000.
This, along with an improved tourist infrastructure nationwide, has had a very positive effect on the casino industry in Panama, an industry that was first privatised in February 1999. Designed to promote tourism in the area, the new law allowed for casinos in five-star hotels with a minimum of 300 rooms. Today there are 15 privately run casinos in operation - eight of which are located in the capital.
As well as 15 casinos there are a further 27 large-scale slot parlours nationwide. In 2008 turnover for the 15 casinos alone stood at $800m. Slot machines accounted for 72.6 per cent of total bets made, which by the end of last year stood at $646.1m, while a further $243.8m (27.4 per cent) was bet on table gaming. Profits for the casinos now stand at over $285m per year.
And it’s not only casino betting that has been on the rise. Latest figures released by the Panamanian Gaming Control Board reveal that since casinos have been privatised, gaming in all sectors, including lottery gaming, sports betting and horse race betting, has all gone up. Per year total bets now stand at $1.2bn and this is in a country with a population of just three million people.
And perhaps there lies the biggest challenge the casino industry faces. One of the main criticisms in the past has been that although the green lighting of casinos was primarily aimed at increasing tourists it was actually Panamanians who seemed to be the ones who were betting the most. In 2006 it was estimated that 85 per cent to 95 per cent of the customers going to casinos were Panamanians. This sparked criticism not only in the Panamanian Congress but also in the national press, which painted a picture of a gambling epidemic going largely unchecked by the Panamanian Gaming Control Board.
However, albeit slowly, this is changing as the tourism sector continues to grow and while casinos are still popular with Panamanians the percentage of foreign visitors to casinos has gone up steadily since 2006. According to officials from the Gaming Control Board the number of tourists in casinos now accounts for 35 per cent of the total visitors to casinos nationwide. This number is expected to continue to go up as more tourists visit Panama each year.
Those operators already established in the region such as Codere and Thunderbird, along with the new operators now entering the market, makes Panama one of the most dynamic gaming markets in the entire region. All the same, due to the global economic downturn, gaming in Panama is predicted to decrease slightly in 2009. This is because fewer tourists, and especially fewer American tourists are expected to travel to Panama this year.
Even with the global downturn many large-scale projects are still set to move forward in the near future. In November 2008 The Nortia Corporation announced that it had entered a joint venture agreement with Grupo Multicentro to build a five-star hotel and casino in Panama City called the Magapolis Nortia Tower. The Nortia Corporation is made up of Spanish gaming company, Cirsa and Nortia Services, a business services company which runs and owns hotels and operates in real estate and other businesses worldwide. Cirsa already runs four casinos in Panama including the $15m 4,880sq.m Majestic in Panama City - the largest casino in Central America. Its partner in this, its newest enterprise in the region, is Panamanian company Grupo Multicentro, which specialises and develops large-scale shopping malls locally.
With an estimated $250m price tag and located in the capital’s fashionable centre of restaurants and luxury shops, building is set to begin at the end of 2009 and will take three years to complete. Once completed the hotel will measure 74 floors in height, house 2,200 rooms and combined encompass a total of 190,000sq.m. As part of the amenities on offer to guests, the five-star hotel will also house a spa, contain an international convention centre and run a casino measuring 500sq.m.
One international operator that has been active in Panama for some time now is Spanish company, Codere. Codere has an increasingly strong presence in the Latin American region and it also runs gaming establishments in Mexico, Uruguay, Brazil and Argentina. Its largest operation in Panama is located in Panama City in the form of a racino attached to the recently renovated Presidente Remon racetrack.
Codere now runs five casinos under brand name Crown Casino in Panama. The fifth Crown casino opened last year and is located in the Hotel Radisson in the city of Colon. Located 50km from the capital, Colon is a popular stopover for cruise liners (40 per cent of all visitors coming to Panama arrive on cruise ships). Combined, the Crown casinos run 73 gaming tables and 1,000 slot machines. Additionally, the Crown Casino Hipódromo, located at the racetrack, houses a further 330 slot machines.
Its business rival in the region, Thunderbird Gaming, has been active in the market in Panama since 1998. Thunderbird now owns and runs six Fiesta brand casinos in Panama. Combined, they house 1,551 slots and 66 tables. Its two largest casinos, Fiesta Casino El Panama located in the Hotel de Panama and the Fiesta Casino Soloy, are both located in Panama City.
In all the Panamanian Gaming Control Board is considering granting a total of nine new casino licences, two of which are likely to be granted before the end of 2009 and both to the two biggest hotels now under construction: the Trump Ocean Club and Los Faros de Panama. The building of a third, the Ice Tower project, which was going to be the tallest building in Panama, was cancelled last year.
Both the Trump Ocean Club and the Los Faros have presented applications to the Gaming Board to build casinos as part of their new hotels although the details of how many slot machines and tables they plan to run in their establishments, is for the moment, unknown. That said, it is believed that both casinos will be large scale. The Trump International Casino will be part of a new $400m development project on the elite Punta Peninsula in Panama City. Only seven minutes away from Panama’s banking centre, the Trump Ocean Club in Panama will rise in the shape of a billowing sail for 70 floors once it is completed. The building, which contains both condominium residences and hotel rooms, is part of a joint venture agreement between the Trump Group and Panamanian company, the K Group.
The Trump Ocean Club in Panama is Donald Trump’s first investment in the Latin American market and so far 70 per cent of the units in the building have been sold. Building should reach completion by the end of next year. Measuring 260,000sq.m, the resort will also house shops, an international business centre, spa and boast a yacht club. As for the casino, it is rumoured that it could extend to 35,000sq.ft of gaming space, which would make it one of the largest casinos in the entire region.
The second other large-scale project now under construction is Los Faros de Panama hotel which consists of three towers and is located in downtown Panama. The 73-floor central tower will contain apartments and a five-star hotel, while the other two towers on either side of it will contain luxury apartment buildings. The central tower will rise to 346m, making it the tallest building in Latin America. At the base of the three towers will be a convention centre and supermarket as well as other amenities.
Spain’s leading real estate company, Grupo Mall, is financing the project in this, its first foray into the Latin American market. Building began in October 2006 and construction is expected to be completed by the end of 2010. The casino, if approved by the Gaming Board, will be situated on the ground floor at the base of the three towers. Total cost of the project now stands at $600m.
In Panama, the granting of the licences has, compared to many other countries in the region, been up until now relatively straightforward. But perhaps a sign of things to come is the opposition of casino owners to the latest licence granted by the Panamanian Gaming Control Board.
Members of Panamanian business group, the Association of Gaming Operators (Asociación de Administradores de Juegos de Azar) are now calling for more transparency in the granting of licences after the gaming board granted a licence to the Four Points Sheraton Hotel. Located in the heart of the capital’s banking and business district the hotel fails, so the association argues, to meet the requirements of the gaming law as it was set out in 1998. This is because the Four Points has fewer than 300 rooms and is a four, not a five-star hotel.
However, the real reason could be that casino owners in the capital do not wish to see their profits diminish in the face of more competition. And in its defence, the Gaming Control Board has stated that it had not been acting illegally in granting a licence to the Four Points. According to the head of the board, Raúl Cortizo, when the gaming act was passed into law in 1998 hotels that were already under construction between 1996 and February 1998 (as is the case for the Four Points) were exempt from the new 300-room and five-star restriction as imposed by the new act.
Even with so many large-scale casinos already up and running in Panama City, Panama remains a strong market for investors. And for the visitor Panama has a wealth of attractions on offer. As well as the colonial ruins of old Panama City and stunning beaches on both the Atlantic and Pacific coasts, Panama also possesses vast tracks of unspoilt rainforest, not to mention, of course, the man-made wonder of the Panama Canal itself.
On top of this it is also becoming increasingly easy to get there not only from other countries in Latin America but also from North America, as six major American cities now run direct flights to Panama daily. Once North America begins to emerge from its present economic downturn, tourist revenue is expected to eventually double by 2018 when, according to current estimates, it could reach $2.8bn per year.
