Uruguay’s government has rejected an appeal by Enjoy against the creation of a new casino concession in Punta del Este and is now analysing a bid by Cipriani, the only proposal received during a recent tender.
Uruguay’s government is moving forward with the tender for a new 20-year casino concession in Punta del Este, despite a challenge to the process by Enjoy. The tender was triggered by a proposal by Cipriani S.A to build a $450m casino resort at the site of the former San Rafael Hotel, while the company was the only bidder in the process, which closed on 20 January.
Chile-based Enjoy – which operates Enjoy Punta del Este Resort and Casino – had appealed against the tender, citing the need to “safeguard its rights”. The company’s subsidiary, Baluma S.A, argued that under an agreement signed with the government back in 1992, it has the exclusive right to operate a casino in the city unless the proposed investment for a new project was greater than or equal to that made for the then Conrad Resort, Punta Del Este.
However, following the government’s decision to reject its appeal, the company has reportedly stated that it plans to take no further action. Cipriani’s bid will now be analysed by an advisory committee made up of representatives from the Planning and Budget Office (OPP), the Office of the President, the ministries of the Economy and Tourism, and Maldonado City Council.
While the company originally planned to restore and refurbish the Tudor-style hotel, which it acquired for more than $40m in February 2018, Cipriani later stated that the structure was “unsafe” and opted to demolish it and build a reconstruction.
According to the proposal, the $180m first phase of the Cipriani Ocean Resort and Club Residences development would include 70 hotel rooms, 75 apartments, and a casino, along with a restaurants, a spa, meeting spaces, and sports facilities.
“It will have a quality that doesn’t presently exist in Punta del Este and it will act as the starting point to attract European visitors to the city,” said Giuseppe Cipriani, the entrepreneur behind the project.
The proposal already has the backing of both the local government and the Office of the President. Nevertheless, the Ministry of Economy and Finance (MEF) confirmed it would still be necessary to call a public tender before issuing a casino licence for the project in March last year.
The investment in the new casino resort must be equal to or higher than $160m. The winning bidder will also be required to pay an annual fee to the government, which will be calculated based on the casino’s gross revenue.
The minimum annual fee will be $7.8m in the first year, with an annual increase of at least $100,000 until 2026. After this date, a fixed amount equal or higher than $8.4m must be proposed by the bidder. Cipriani had previously characterised obtaining a casino licence as fundamental for the development to proceed.
“I wasn’t looking to invest but the possibility arose to purchase the site of the hotel,” he explained, speaking during a recent interview. “Additionally …there was the chance to have the casino which is fundamental for the business. “What’s more, there was the political will – both on the part of the city council and the central government – to see San Rafael return to what it was in the past. That’s something which is very important.”
In other Punta del Este news, the company behind Casino Nogaró in Punta del Este is suing the Uruguayan government for $21m in compensation. Vidaplan S.A. has rented the property in the popular seaside resort since 2009 and contends that it has faced unfair competition from a nearby state-run gaming room at the Punta Shopping mall. The lawsuit is directed at the country’s regulator, the Dirección General de Casinos (DGC), while the company has also requested that its contract with the state entity be cancelled.
A hearing is scheduled for the beginning of March. Under Uruguay’s mixed system, Vidaplan sublets the property to the DGC which operates it in return for a share of the casino’s profits.
In November, the company said that even if the DGC does not terminate the contract, it would close the casino in late April. Casino Nogaró includes 152 slot machines and several roulette, punto banco, black jack and poker tables.
Punta Shopping’s Sala Las Vegas gaming room features “more than 300 slots and four of the latest progressive jackpots”, along with multiplayer two electronic roulette tables and two multi-station electronic poker tables, according to the DGC.
While the regulator had previously said the gaming venue would be closed, it ultimately opted to expand it instead, a move which Vidaplan blames for its financial losses at Casino Nogaró.
