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Economic losses from the casino ban (Ecuador)
Economy losses from casino ban
Resume Summary
The ban on land-based casinos following a 2011 popular consultation radically changed the structure of the evening economy in Quito and Guayaquil. The economic effects of the ban are concentrated in five blocks: employment, tourism/MICE and hotels, fiscal revenues, investment/capital, gray economy and online "leaks." Some of the losses were partially offset by the growth of national lotteries and the "whitewashing" of sports betting (since 2024), but in terms of the structure of jobs and multiplier, this is not an equivalent replacement for offline casinos.
1) Loss of employment and household income
Direct jobs. Gone are the positions of dealers, pit bosses, cashiers, security, slot technicians, marketing and F&B on night shifts.
Indirect employment. The loading of related services sank: taxis and transfers after 23:00, cleaning and hotel security, catering, small suppliers (bakeries, florists, laundries).
Consequences. The fall in evening shifts and tips → a decrease in the disposable income of parts of city blocks, where casinos were the "anchor" of the flow of guests.
2) Tourism, MICE and hotel economy
Hotels 4-5. Until 2011, casinos added an "entertainment premium" to the ADR/RevPAR and retained guests in the evening (bar, show, auditorium). After the ban, the evening check and the occupancy of late F&B slots declined.
MICE portfolio. Conferences and corporate events more often choose locations with a "set" of evening activities; part of the demand has shifted to neighboring countries.
Regional accents.
Guayaquil: was more dependent on business traffic and port logistics - the loss of evening revenue is more noticeable here.
Quito: The effect is softer in absolute but palpable in tourist clusters (La Mariscal and the surrounding area).
3) Fiscal base and tax structure
Budget revenues. With the disappearance of the casino, licensing fees/industry fees disappeared, indirect revenues (VAT on F&B and entertainment, corporate income taxes, income tax on salaries of night shifts) shrank.
Substitution. Since 2024, the "whitewash" of sports betting has added a new stable source (GGR taxation), but this vertical creates digital office jobs and advertising budgets, rather than night offline shifts in cities. The multiplier for taxis, bars and events is lower than that of the previous "hotel + casino" package.
4) Write-off of investments and loss of capitalization
Pending and frozen attachments. Equipment of halls, software systems for monitoring, reconfiguration of spaces - part of the investment is written off or sold at a discount.
Intangible assets. Contracts with event content providers were broken, active loyalty bases and VIP flow management know-how were lost.
5) Growth of "shadow" and "leakage" of demand
Underground slot and "clubs." Part of the local demand flowed into illegal points: these are turnover without taxes, without guarantees of payments and with increased social risks of the districts.
Online "leaks." In the absence of a local license for online casinos, payments and play go to international sites/applications, which reduces local multipliers and transfers margins outside the country's economy.
6) Night economy and urban life
"Tail" closure. Evening mobility decreased: fewer taxi rides, lower demand for late kitchens and bar shifts, and mini-concerts in hotels are thinning.
Business adaptation. Hotels repackaged the product: gastronomic festivals, wellness packages, local culture and excursions. This keeps some of the demand, but does not fully make up for the casino "magnet" and the associated average check.
7) Who suffered more
Urban "corridors" around former venues: cafes/bars, live music providers, taxi parks.
Personnel with specific skills: dealers, pit bosses, slot technicians - the conversion of competencies to other professions took time and did not always pass without loss of income.
MICE venues: Hotels with a large banquet fund and conference areas.
8) Which partially compensated for the losses
Lotteries: Sustained "white" demand with social legitimacy.
Sports betting (from 2024): new fiscal vertical, growth in marketing and IT employment, football sponsorship.
Cultural and gastro events: holidays, fairs, concerts - create alternative evening streams, but require an active role for municipalities.
9) Evaluation methodology: how to calculate your figure (box)
If quantitative evaluation is required for the report/feasibility study, use the scenario approach:1. Base 2010 (counterfactual)
Number of halls/tables/slots and average revolutions for analogues of the region.
Hotel occupancy 4-5 by quarter, F&B evening revenue share, average check.
2. Employment multiplier
Direct jobs × coefficients of intersectoral tables (tourism, transport, catering).
3. Fiscal footprint
VAT, income tax, income tax, royalties minus admin costs.
4. Scenarios
S1 "Conservative": part of the demand disappears, part goes to lotteries/sports, a small "shadow."
S2 "Market": significant offshore "leak," medium "shadow."
S3 "Aggressive": high "leaks "+ underground, strong drawdown of the night economy.
10) Social price vs economic benefit
It is important to admit: the ban solved social problems (ludomania, protection of the vulnerable, moral and ethical request). Economic assessment does not cancel these goals, but it helps to honestly see a compromise: a decrease in visible excitement was accompanied by a loss of part of urban and tourist revenue and an increase in "gray" practices.
11) Political and economic options for mitigating losses (without lifting the ban)
Night economy strategy: late museums, gastro routes, safe night transport, quarterly festivals.
MICE incentives: tax/rental incentives for large congresses, destination marketing.
Antithene: underground raids + financial monitoring of unlicensed POS and "quasi-P2P" schemes.
Player-oriented prevention: help lines, self-exclusion, financial behavior education.
Digital lotteries and sports: improving the quality of online services, transparent reports on "social returns."
12) If you discuss partial reintegration (theory)
Theoretically, a narrow model (for example, only 5-hotels with rigid RG/KYC/AML, high inspection standards) is able to return part of the evening revenue and employment without "spreading" around the city. But this is already a political choice with a separate procedure and legislative architecture.
Economically, the ban on casinos in Ecuador led to a reduction in offline employment in the evening sector, a drawdown of the tourist and MICE check, a compression of the fiscal base and "leaks" of demand underground and offshore online. "White" verticals - lotteries and (since 2024) sports betting - softened the blow, but did not restore the entire city multiplier, which was given by a combination of "hotel + casino + night infrastructure." To minimize long-term losses without changing the ban, proactive measures are needed to develop the night economy, MICE and combat the "shadow"; otherwise, not only taxes leak, but also urban growth opportunities.