P.R. Laws tit. 15, § 74
(a) Any license issued under §§ 71–79 and 85–89 of this title shall be subject to payment by the licensee to the Secretary of the Treasury, of the license fees determined pursuant to the provisions of § 76 of this title, and said fees shall be paid quarterly, in advance. The revenues collected on account of said licenses shall be covered into the General Fund of the Commonwealth Treasury. The Commissioner of Financial Institutions is hereby empowered to prescribe such regulations as he/she may deem necessary or convenient for the collection of the license fees fixed under §§ 71–79 and 85–89 of this title and may proceed to collect such fees using the administrative or judiciary procedures provided by law.
(b) The gross income produced by the slot machines shall be electronically calibrated to yield a maximum of seventeen percent (17%) of the volume of the machines as profit for the operator; Provided, That the proportion of profit for the player shall never be less than eighty-three percent (83%), which share shall be measured throughout a reasonable period of time to be established by regulations. Notwithstanding the above, any licensee who wishes to operate any slot machines with a share of profit for the player greater than eighty-three percent (83%) shall obtain the prior authorization of the Tourism Company.
(c) For fiscal years commencing prior to fiscal year 1997-98, the annual net income shall be distributed according to the following rules:
The income produced by the slot machines shall be deposited in a special account in the Tourism Company, separate from its general funds. The amortized cost and the operating cost of the slot machines shall be deducted from the annual gross income produced by the slot machines and received by the operator. The difference shall be the annual net income.
(1) Seventeen percent (17%) of the annual net income shall be covered into a Special Fund each month in the name, and for the benefit of the Tourism Company to carry out its corporate purposes.
(2) Twenty percent (20%) of the annual net income shall be considered as a tax on slot machine transactions, which shall replace the one percent (1%) tax on the face value of the chips or any other substitute for them as provided by Act No. 2 of January 20, 1956, as amended, in § 40A of subsection (b) of § 11, in § 40A of Part B of Chapter 111 and in subsection (g) of § 61 thereof, which are hereby repealed by this Act. This twenty percent (20%) of the annual net income, which constitutes the proceeds of the tax collected from the operation of the slot machines, shall be forwarded to the Secretary of the Treasury who shall wholly cover it into the Educational Fund.
(3) Another twenty percent (20%) of the annual net income shall be covered annually into the General Fund of the University of Puerto Rico.
(4) Thirty-four percent (34%) of the annual net income shall be remitted monthly to licensees or, if the provisions of § 72 of this title apply, regarding the licensee tax debts already assessed and to be collected, to the Secretary of the Treasury. The thirty-four percent (34%) net annual income shall be distributed in the same proportion that the slot machines located in each casino have generated revenues with respect to the total proceeds of all slot machines in all of the casinos.
(5) Nine percent (9%) surplus of net annual income shall be remitted monthly into a special fund, separated from the general funds of the Tourism Company denominated the “Puerto Rico Tourism Industry Development Fund”. The fund shall be devoted to the strengthening and development of the tourism industry. The disposition, use or accounting of this fund shall require, in all cases, the approval of the Board of Directors of the Tourism Company, except for an annual appropriation of five hundred thousand dollars ($500,000) from said fund to be appropriated to the Horse Racing Industry and Sport Administration to be used to defray the prizes and broadcasting of the events related to Clásico Internacional del Caribe. Provided, That the funds shall only be appropriated when said events are held in Puerto Rico.
(d) For Fiscal Year 1997-98 and subsequent fiscal years, the annual net income shall be determined according to the following rules:
(1) The income produced by the slot machines, be they the property of or owned by the Tourism Company or the licensees, shall be covered into a special fund in the Tourism Company, separate from its general funds. From the annual gross income produced by the slot machines and received by the operator, there shall be deducted:
(A) Monthly, all the operating costs of the slot machines of the Tourism Company, including, but not limited to, the salaries, remuneration and any other benefits received by those employees of the Tourism Company whose functions are related to the operation of the slot machines; Provided, That when an employee of the Tourism Company performs other functions unrelated to the operation of the slot machines besides those related to the operation of the slot machines, the amount shall also be deducted from his/her salary, remuneration and any other benefits corresponding to the functions related to the operation of the slot machines;
(B) monthly, all costs for the amortization, leasing, operation and maintenance of the slot machines possessed by the Tourism Company for said month, and
(C) an amount to be paid monthly to the licensees equal to the monthly cost for the amortization of the slot machines owned by them or the monthly cost for leasing the slot machines leased by them for said month; Provided, That:
(i) The cost of the slot machines must be amortized for a minimum term of three (3) years, and
(ii) in no case shall the amount to be paid to the licensees on account of the amortization or leasing costs of the slot machines exceed the annual sum of two thousand five hundred dollars ($2,500) per machine. This payment shall only be allowed during fiscal years 1997-98, 1998-99 and 1999-00. No payment whatsoever shall be made to the licensees after this period.
The difference between the annual gross income and the above mentioned deductions shall be the annual net income.
(e) The annual net income determined pursuant to subsection (d) of this section shall be distributed as follows:
(1) For fiscal years 1997-98, 1998-99 and 1999-00:
(A)
(i) Thirty-four percent (34%) of the base period income, as defined in subsection (f)(1) of this section, shall be distributed to Group A, as defined in subsection (f)(2)(A) of this section, and
(ii) sixty-six percent (66%) of the base period income shall be distributed as follows:
(I) Group B, as defined in subsection (f)(2)(B) of this section shall receive up to the amount received by Group B in fiscal year 1996-97, and
(II) the surplus, if any, shall be received each quarter by the General Fund of the Commonwealth Treasury pursuant to the provisions of §§ 71–79 and 85–89 of this title.
(B)
(i) Any annual net income in excess of the base period income shall be distributed as follows:
(I) Ninety percent (90%) of such excess shall be quarterly transferred to the General Fund of the Commonwealth Treasury, pursuant to the provisions of §§ 71-79 and 85-89 of this title until the annual amount received by the General Fund of the Commonwealth Treasury under preceding paragraph (A) and this paragraph reaches thirty million dollars ($30,000,000) annually; and
(II) the remaining ten percent (10%) shall be distributed to Group A.
(ii) Should the General Fund of the Commonwealth Treasury fail to receive the annual amount of thirty (30) million dollars [sic], then the income that the Tourism Company may have received on account of an increase, if any, of the percentage of the tax on room rates of seven percent (7%) to nine percent (9%) for hotels, apartment hotels, guest houses and motels, and of nine percent (9%) to eleven percent (11%) for the hotels authorized by the Commissioner of Financial Institutions to operate gambling rooms as provided in subsection (a) of Section 2051 and in subsection (a)(5) of Section 2084 of Act No. 120 of October 31, 1994, which have been destined for a special account separate from the general funds of the Tourism Company, denominated as Special Account I, if any, shall be added to the amounts received by the General Fund of the Commonwealth Treasury pursuant to the provisions of the preceding paragraph (A) and the preceding subparagraph (i) of this paragraph until the General Fund of the Commonwealth Treasury has received the amount of thirty million (30,000) dollars [sic].
(C) Any annual net income in excess of the amounts distributed under paragraph (A) and (B) of this clause, shall be distributed as follows: sixty percent (60%) to Group A and forty percent (40%) to Group B.
(2) For fiscal years 2000-2001 to 2009-2010:
(A) Thirty-four percent (34%) of the base period income, as defined in subsection (f)(1) of this section, shall be distributed to Group A, as defined in subsection (f)(2)(A) of this section, and sixty-six percent (66%) of the base period income shall be distributed to Group B, as defined in subsection (f)(2)(B) of this section.
(B) Any annual net income in excess of the base period income shall be distributed as follows: sixty percent (60%) to Group A and forty percent (40%) to Group B.
(3) For Fiscal Year 2010-2011:
(A) The first three hundred and fifteen million (315,000,000) dollars annual net income shall be distributed as follows:
(i) Thirty-four percent (34%) of the base period income, as defined in subsection (f)(1) of this section, shall be distributed to Group A, as defined in subsection (f)(2)(A) of this section, and sixty-six percent (66%) of the base period income shall be distributed to Group B, as defined in subsection (F)(2)(B) of this section.
(ii) Any annual net income in excess of the base period income shall be distributed as follows: sixty percent (60%) to Group A and forty percent (40%) to Group B.
(B) The next forty-five million (45,000,000) dollar annual net income shall be distributed as follows:
(i) Nine percent (9%) to Group A, as defined in subsection (f)(2)(A) of this section;
(ii) nine percent (9%) to the Puerto Rico Tourism Company;
(iii) twenty percent (20%) to the General Fund of the University of Puerto Rico, and
(iv) sixty-two percent (62%) to the General Fund of the Commonwealth Treasury.
(C) Any annual net income in excess of three hundred sixty million (360,000,000) shall be distributed as follows:
(i) Eighty percent (80%) to Group A, as defined in subsection (f)(2)(A) of this section, and
(ii) twenty percent (20%) to Group B, as defined in subsection (f)(2)(Bi) of this section.
(4) For fiscal year 2011-2012 and subsequent fiscal years:
(A) The first three hundred fifteen million dollar ($315,000,000) annual net income shall be distributed as follows:
(i) Thirty-four percent (34%) of the base period income, as defined in subsection (f)(1) of this section, shall be distributed to Group A, as defined in subsection (f)(2)(A) of this section, and sixty-six percent (66%) of the base period income shall be distributed to Group B, as defined in subsection (f)(2)(Bi) of this section.
(ii) Any annual net income in excess of the base period income shall be distributed as follows: sixty percent (60%) to Group A and forty percent (40%) to Group B.
(B) Any annual net income in excess of three hundred fifteen million dollars ($315,000,000) shall be distributed as follows:
(i) Eighty percent (80%) to Group A, as defined in subsection (f)(2)(A) of this section, and
(ii) twenty percent (20%) to Group B, as defined in subsection (F)(2)(B) of this section.
(5) For Fiscal Year 2013-2014 and subsequent fiscal years:
(A) The first three hundred fifteen million dollars ($315,000,000) annual net income shall be distributed as follows:
(i) Thirty-four percent (34%) of the base period income, as defined in subsection (f)(1) of this section, shall be distributed to Group A, as defined in subsection (f)(2)(A) of this section, and sixty-six percent (66%) of the base period income shall be distributed to Group B, as defined in subsection (f)(2)(B) of this section.
(ii) Any annual net income in excess of the base period income shall be distributed as follows: sixty percent (60%) to Group A and forty percent (40%) to Group B.
(B) Any annual net income in excess of three hundred fifteen million dollars ($315,000,000) up to four hundred ninety-five million dollars ($495,000,000) shall be distributed as follows: fifty-five percent (55%) to the General Fund under the custody of the Secretary, and the remaining forty-five percent (45%) to Group A, as defined in subsection (f)(2)(A) of this section.
(C) Any annual net income in excess of four hundred ninety- five million dollars ($495,000,000) shall be distributed as follows: eighty percent (80%) to Group A, and the remaining twenty percent (20%) to Group B, as defined in subsection (f)(2)(B) of this section.
(f)
(1)
(A) The base period income shall be equal to an amount equivalent to the net annual income per slot machine for fiscal year 1996-97, as determined pursuant to the provisions of paragraph (B) of this clause, multiplied by the adjusted number of slot machines for fiscal year 1997-98, as determined pursuant to the provisions of paragraph (C) of this clause; Provided, That the base period income shall not be less than the net annual income produced by all slot machines for fiscal year 1996-97.
(B) The net annual income per slot machine for fiscal year 1996-97 shall be the total annual net income for fiscal year 1996-97 divided by the adjusted number of slot machines installed during fiscal year 1996-97.
(C) In order to compute the adjusted number of slot machines in operation during any fiscal year, those slot machines which have been in operation during a full twelve (12) -month period during said fiscal year shall be assigned a value of one (1), and those slot machines which have been in operation for a period of less than twelve (12) months during said fiscal year shall be assigned a value which shall be determined by a fraction whose numerator shall be the total number of full months in which each slot machine has been in operation during said fiscal year, and the denominator shall be equal to twelve (12).
(2)
(A) Group A shall be constituted by all licensees who possess slot machines in their gambling rooms, and the annual net income distributable to Group A shall be distributed to each licensee pursuant to the rules established by subsection (g) of this section.
(B) For the 1998-99 fiscal year and subsequent fiscal years, Group B shall be composed of funds indicated below, and the annual net income distributable to Group B shall be distributed as follows:
(i) Twenty-five point eight percent (25.8%) shall be covered monthly into the Special Fund mentioned in subsection (c)(1) of this section.
(ii) Fifteen point fifteen percent (15.15%) shall be remitted to the Secretary of the Treasury, who shall deposit the total sum in the General Fund of the Commonwealth Treasury.
(iii) Thirteen point six percent (13.6%) shall be covered monthly into the “Puerto Rico Tourist Industry Development Fund”.
(iv) Forty-five point forty-five percent (45.45%) shall be covered into the General Fund of the University of Puerto Rico on a monthly basis.
(g) For Fiscal Year 1997-98 and subsequent fiscal years, the annual net income to be distributed to Group A shall be distributed among licensees as follows:
(1) The annual net income to be distributed to each licensee shall be determined by subtracting the cost of the slot machines attributable to said licensee from the gross income attributable to said licensee.
(2) The gross income attributable to each licensee shall be determined pursuant to the rules provided in this clause. The gross income of Group A shall be determined by multiplying the gross income of all slot machines by a fraction whose numerator shall be equal to the annual net income distributed to Group A, as determined under subsection (e) of this section, and the denominator shall be equal to the total annual net income distributed to Group A, Group B, and the General Fund of the Commonwealth Treasury and the General Fund of the University of Puerto Rico and the Tourism Company, in those fiscal years in which they shall receive direct allocations from these funds pursuant to §§ 71-79 and 85-89 of this title. The gross income attributable to each licensee shall be determined by multiplying the gross income of Group A by a fraction whose numerator shall be the gross income generated by slot machines placed in the gambling room of said licensee, and the denominator shall be the gross income generated by all slot machines in all gambling rooms.
(3) In the case of slot machines owned or possessed by licensees, the cost of machines attributable to the licensee shall be determined according to the following rules:
(A) The gross cost of the slot machines located in the gambling room of each licensee shall be the sum of:
(i) The deductible amount under subsection (d)(1)(C) of this section for the slot machines located in the gambling room of said licensee plus
(ii) the proportion of the expenses of the Tourism Company under subsection (d)(1)(A) of this section attributable to said slot machines. The proportion of said expenses is determined by multiplying the expenses of the Tourism Company under subsection (d)(1)(A) of this section by a fraction whose numerator shall be the adjusted number, as provided in subsection (f)(1)(C) of this section, of the slot machines located in the gambling room of the licensee, and the denominator shall be the total adjusted number, as provided in subsection (f)(1)(C) of this section, of all the slot machines located in all the gambling rooms. After fiscal years 1997-98, 1998-99 and 1999-2000, no deduction shall be allowed under subsection (d)(1)(C) of this section.
(B) The cost of slot machines attributable to licensees shall be equal to the gross cost of machines located in his/her gambling room multiplied by a fraction whose numerator shall be the annual income distributed to Group A, as determined under subsection (e) of this section, and the denominator shall be the annual net income distributed to Group A, Group B, and the General Fund of the Commonwealth Treasury and the General Fund of the University of Puerto Rico and the Tourism Company, in those fiscal years in which they shall receive direct allotments from these funds pursuant to §§ 71-79 and 85-89 of this title.
(4) In the case of slot machines owned or possessed by the Tourism Company, the cost of machines attributable to licensees shall be determined pursuant to the following rules:
(A) The gross cost of the slot machines of the Tourism Company located in the gambling room of each licensee shall be the sum of:
(i) The Tourism Company’s cost under subsection (d)(1)(B) of this section attributable to the slot machines located in the gambling room of said licensee plus,
(ii) the proportion of the expenses of the Tourism Company under subsection (d)(1)(A) of this section attributable to said slot machines. The cost of the Tourism Company under subsection (d)(1)(B) of this section attributable to the slot machines located in the gambling room of the licensee shall be calculated by multiplying the costs of the Tourism Company under subsection (d)(1)(B) of this section by a fraction whose numerator shall be the adjusted number, as provided in subsection (f)(1)(C) of this section, of the slot machines of the Tourism Company located in the gambling room of said licensee, and the denominator shall be the total adjusted number, as provided in subsection (f)(1)(C) of this section, of the slot machines of the Tourism Company located in all the gambling rooms. The proportion of the expenses of the Tourism Company attributable to the licensee is calculated by multiplying the expenses of the Tourism Company under subsection (d)(1)(A) of this section by a fraction whose numerator shall be the adjusted number, as provided in subsection (f)(1)(C) of this section, of the slot machines of the Tourism Company located in the gambling room of said licensee, and the denominator shall be the total adjusted number, as provided in subsection (f)(1)(C) of this section, of the slot machines of the Tourism Company located in all the gambling rooms.
(B) The cost of the slot machines of the Tourism Company attributable to the licensee shall be equal to the gross cost of the machines of the Tourism Company located in their gambling rooms, multiplied by a fraction whose numerator shall be the annual income distributed to Group A, as determined under subsection (e) of this section, and the denominator shall be the annual net income distributed to Group A, Group B, and the General Fund of the Commonwealth Treasury and the General Fund of the University of Puerto Rico and the Tourism Company, in those fiscal years in which they shall receive direct allocations from these funds pursuant to §§ 71-79 and 85-89 of this title.
(5) If a slot machine is the property of the Tourism Company for a part of a fiscal year, and the licensee for the rest of said fiscal year, the cost of said slot machine shall be computed for that portion of the fiscal year in which the slot machine was the property of the Tourism Company according to the rules provided in clause (4) of this subsection, and the cost of said slot machine shall be computed according to the rules provided in clause (3) of this subsection.
(6) If the annual net income of any licensee is less than zero, it shall then be understood that the annual net income of said licensee equals zero. The excess of the costs of said licensee shall be added to the costs of those licensees with an annual net income greater than zero in a proportion equal to the number of slot machines of each licensee whose annual net income is greater than zero and the total number of slot machines located in the gambling rooms of all the licensees whose annual net income is greater than zero, in order to determine the annual net income which they shall receive.
(7) Whenever the deficiency of all the licensees whose annual net income is less than zero is distributed in the manner provided in the preceding clause (6) of this subsection, the annual net income of any licensee diminishes to an amount of less than zero, said deficiency shall then be deducted from the annual net income of every licensee whose annual net income remains greater than zero in the same proportion that the number of slot machines located in his/her gambling room and the total number of slot machines located in the gambling rooms of all the licensees whose annual net income remains greater than zero, until the deficiency is wholly absorbed so that the total amount to be distributed among all the licensees is equal to the annual net income received by Group A pursuant to the provisions of subsection (e) of this section.
(h)
(1) The proportion corresponding to each group and the General Fund of the Commonwealth Treasury shall be paid to these according to the provisions of this section, based on an estimate of the annual net income calculated by the Tourism Company. Every month, the Tourism Company shall tentatively allocate to Group A, Group B, and the General Fund of the Commonwealth Treasury and the General Fund of the University of Puerto Rico and the Tourism Company, one twelfth (1/12) of the amounts to be distributed among these, pursuant to subsection (e) of this section, in those fiscal years in which they shall receive direct allocations from these funds.
(2) Every monthly allocation can be modified by the Tourism Company, at its discretion, to adjust any payments made in previous months that was in excess of or below the correct amount, to any group, including the General Fund of the Commonwealth Treasury and the General Fund of the University of Puerto Rico and the Tourism Company, in those fiscal years in which they shall receive direct allocations from these funds pursuant to §§ 71-79 and 85-89 of this title. After adjusting the monthly assignments, the Tourism Company shall proceed to make the monthly payments required in §§ 71-79 and 85-89 of this title. Every three (3) months, the Tourism Company shall make the required payments to the General Fund of the Commonwealth Treasury and the General Fund of the University of Puerto Rico, and the Tourism Company, in those fiscal years in which they shall receive direct allocations from these funds pursuant to §§ 71-79 and 85-89 of this title. At the close of every fiscal year, the Tourism Company shall make those payments required under §§ 71-79 and 85-89 of this title. Payments made pursuant to the provisions of this subsection are estimates; therefore, the Tourism Company may withhold, during the last three (3) months of the year, all or part of those payments that must be made monthly or quarterly, so as to ensure that the total amount of the payments made to each entity shows the final payment required by clause (5) of this subsection.
(3) Within ninety (90) days after June 30 of each year, the Tourism Company shall conduct a final liquidation of the funds distributed to Group A, Group B, and the General Fund of the Commonwealth Treasury, and to the General Fund of the University of Puerto Rico, and the Tourism Company, in those fiscal years in which they shall receive direct allocations from these funds pursuant to §§ 71-79 and 85-89 of this title. Should there be an excess in the funds collected during the fiscal year, the Tourism Company shall transfer to each group and the General Fund of the Commonwealth Treasury and the General Fund of the University of Puerto Rico and the Tourism Company, in those fiscal years in which they shall receive direct allocations from these funds pursuant to §§ 71-79 and 85-89 of this title, any corresponding amount from such excess. If during the fiscal year, amounts have been transferred that were in excess of those corresponding to any of the groups or the General Fund of the Commonwealth Treasury, or for Fiscal Year 2010-2011 and subsequent fiscal years, to the General Fund of the University of Puerto Rico, pursuant to such final liquidation, the Tourism Company shall withhold from such amounts to be transferred in the following fiscal year, the amounts necessary to recover such excess, regardless of whether the payments in excess were made by the Tourism Company.
(i) None of the members of Group A, Group B, or the General Fund of the Commonwealth Treasury, or for Fiscal Year 2010-2011 and subsequent fiscal years, the General Fund of the University of Puerto Rico, may claim deficiencies or errors in the computation of the amounts that they have received during any specific fiscal year unless they file a claim with the Tourism Company to that effect within one hundred eighty (180) days after the close of such fiscal year.
(j) Likewise, the Commissioner of Financial Institutions is hereby empowered to conduct periodic investigations of the income derived from the operation of the gambling rooms and the operation of the slot machines authorized by this chapter as such income is received. The Commissioner of Financial Institutions is hereby empowered to prescribe such regulations as he/she may deem necessary or convenient to comply with the provisions of this subsection.
(k) Licensees under §§ 71—79 and 85—89 of this title and the Tourism Company shall be bound to permit the inspection of their income in the manner the Commissioner of Financial Institutions shall determine.
History —May 15, 1948, No. 221, p. 750, § 5; May 8, 1951, No. 373, p. 888, § 2; Apr. 5, 1952, No. 25, p. 60, § 1; June 23, 1956, No. 90, p. 582, § 5; July 30, 1974, No. 2, Part 2, p. 587, § 4; June 16, 1976, No. 5, p. 656, § 1; June 26, 1980, No. 13, p. 895, § 1; July 2, 1985, No. 46, p. 166, § 2; Sept. 3, 1996, No. 185, § 3; June 26, 1997, No. 24, § 5; June 25, 1998, No. 100, § 12; July 1, 1999, No. 138, § 11; Aug. 11, 2002, No. 170, § 2; Aug. 4, 2004, No. 192, § 1; July 29, 2005, No. 36, § 1, July 2, 2010, No. 72, § 1; June 30, 2013, No. 48, § 3.