Chile’s Gambling Ecosystem Under Siege Over Allegations of Fraud, Other Illegal Activity

There’s trouble brewing in Chile’s gambling industry that might not have a happy ending. On several fronts, accusations of fraud, embezzlement, abuse of authority and more are coming to the surface.

Casino Dreams Iquique, one of many casinos Casino Dreams owns in Chile. The company and others now find themselves involved in what could be an investigation that disrupts the entire ecosystem. (Image: Casino Dreams)

Chile has been attempting to move its gaming ecosystem forward through the potential legalization of the online segment. Online casinos and sportsbooks are in the works, but the fallout from the latest revelations might become a roadblock to approval.

Involved in the turmoil are high-profile figures at different levels. Executives with casino operators Dreams and others, local mayors and more have allegedly left the gambling industry with a huge black eye.

Casino Operators Under Fire

Chile’s National Economic Prosecutor’s Office (FNE, for its Spanish acronym) is carrying out an intense investigation of casino operators, according to media outlet Diario Financiero. This follows the alleged detection of possible collusion between casinos.

Personnel with the Investigative Police (PDI, for its Spanish acronym) last week seized personal devices, including cell phones and computers, of the highest executives and owners of the main operators of the industry.

The FNE did not immediately explain the nature of the raids, according to sources inside the operators. However, an unidentified person in one of the target companies confirmed the collusion rumors.

Another media outlet, El Semanal de El Mostrador, reported on Tuesday that the FNE had raided the properties of three executives of Enjoy, Dreams and Marina del Sol casino chains. The alleged goal was to find evidence to support the theory of collusion.

A source who asked for anonymity told Diario Financiero that the FNE’s actions are confusing. The government agency has not provided those involved with more details, nor has it explained their actions that led to the allegations.

Retaliation a Possible Motive

Enjoy and Dreams are still working on a planned merger they began a year ago. The FNE plays a role in the process because of the size of the resulting business and its anti-competition implications. In June, it gave the green light for the merger to take another step forward, but its involvement may have uncovered something unsettling.

In addition, Dreams is in the middle of a heated battle with unions. Last month, employees at the operator’s Fiesta Casino in Peru agreed to unionize. However, a day later, the company fired nine of them, all of whom were on the union’s board of directors.

That issue is already in the hands of Peru’s Ministry of Labor, but the employees received support from as far away as Las Vegas. The Culinary Workers Union (CWU) Local 226 in Las Vegas has contacted Dreams, admonishing the company over its union-busting activity.

In addition, it hinted at the possibility of Dreams running into trouble in Vegas as it considers expanding into the city. Dreams has previously confirmed that it is ready to become part of Sin City, but it might have trouble finding employees based on its current attitude.

The Town Without Money

Elsewhere in Chile, the commune of San Francisco de Mostazal is one of the richest communes in the country. This is due to the benefits it receives as the host of the Casino Monticello. However, walking around the commune, no one would know that it had received millions of dollars in economic support.

This has led to an investigation of a former mayor. The current mayor, Santiago Gárate, received the commune in unkept conditions and with massive debts. He blames his predecessor, Sergio Medel, who spent 12 years leading San Francisco.

Gárate maintains that Medel used the funds meant for social and community initiatives for other purposes. Therefore, and amid accusations of possible corruption, he and other authorities of the municipality, have filed complaints against the former mayor and his close circle.

In addition, Gárate ordered a forensic audit to support the corruption theory. However, by law, the audit can only review the last four years of the administration of the former mayor. Nevertheless, the study showed that, between December 2016 and June 2021, the municipality accumulated almost $9.5 million in debt.

The audit also uncovered other potential instances of fraud and corruption, including in the management of school funds. As a result, the municipality of Mostazal filed a complaint for fraud against Medel and the heads of the municipal education department.

Casino Monticello is another Dreams property.

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