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San Juan Superior Court strikes down adult gaming machine regulations

The San Juan Superior Court has struck down several regulations related to the operation of adult gaming machines outside government-approved hotel casinos, as a resolution to a lawsuit filed by Electronic Games Inc. against the government of Puerto Rico last year.

In her decision dated July 14, 2021, Superior Court Judge Glorianne M. Lotti-Rodríguez declared “null and void” Regulations 9174 and 9175 drafted by the Puerto Rico Tourism Co., confirming Electronic Games’ claims that they were “granted by an agency without the legal power to do so.”

On July 15, 2020, Electronic Games — which operates adult gaming machines, slots usually found in private establishments like restaurants, bakeries, and gas station mini markets — sued the Puerto Rico Tourism Co. and the Puerto Rico Gaming Commission. In its plea, Electronic Games claimed that Act 257 of 2018 approved the operation of such machines off casino premises.

In the legal filing, the company sustained that Act 81 of 2019, better known as the Government of Puerto Rico’s Gaming Commission Act, the authority to regulate, license and oversee these operations was transferred to the Gaming Commission.

Electronic Games claimed that despite that, the Tourism Co. submitted Regulations 9174 and 9175 to the Puerto Rico State Department for final approval. The company argued that the regulations are invalid because the Tourism Co. acted without jurisdiction when authorizing them.

On the other hand, the firm added that the regulations contain several sections that are unconstitutional and/or go beyond the powers granted. For this reason, it requested that the regulations be declared null and void.

On Sept. 1, 2020, the Tourism Co. filed a Motion for Dismissal. In summary, the government agency alleged that it began the regulatory process in 2018, when it still had the authority to regulate adult gaming machines.

The Tourism Co. argued that what it had done was valid, because it was during the transition process. The agency also added that the Gaming Commission endorsed such procedure through Resolution 2020-03.

The Tourism Co. also argued that the Gaming Commission has not applied the regulations to Electronic Games, so, it should take its claim to the Court of Appeals. Furthermore, it argued that the complaint fails to present a claim justifying the granting of a remedy. Therefore, it asked for the most recent claim to be dismissed.

Electronic Games responded with a countermotion of its own, filed Oct. 13, 2020, stating that Act 257 of 2018 delegated to the Tourism Co. the power to regulate the Gaming Industry. However, it established that through Act 81-2019, such powers were delegated to the Gaming Commission. So, it argued that the Tourism Co. acted without jurisdiction when promulgating the regulations.

Electronic Games further argued that Act 81 of 2019 did not establish that the Gaming Commission would have the power to regulate the adult gaming machines when the transition process was completed, but instead granted it the power immediately.

The back-and-forth between the parties continued through February 2021, when Electronic Games opposed a prior request from the Gaming Commission, asking the court to reject the private company’s motion to dismiss the case.

Separately, last year Puerto Rico Government Gaming Commission Executive Director José Maymó-Azize announced the start of the process to get comments from the general public on the regulations that will govern the island’s sports betting, fantasy contests and electronic games operation, as News is my Business reported.

Reporter Edison R. Misla collaborated with this story.

Author Details
Author Details
Business reporter with 29 years of experience writing for weekly and daily newspapers, as well as trade publications in Puerto Rico. My list of former employers includes Caribbean Business, The San Juan Star, and the Puerto Rico Daily Sun, among others. My areas of expertise include telecommunications, technology, retail, agriculture, tourism, banking and most other segments of Puerto Rico’s economy.

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