When Canadian private equity fund manager Clairvest moved to invest in Chilean casinos more than a decade ago, one of the deciding factors was the country’s reputation for stability and the rule of law.
Now that standing is at risk as the government changes the way it will auction off its next round of gaming concessions, according to Michael Wagman, president of Clairvest. The 15-year concessions will be sold to the highest bidder, instead of giving preference to current operators, as they expected.
Clairvest has joined with four other operators of Chilean casinos to challenge the rules in court and the plaintiffs say they’ll take their case to the World Bank’s International Centre for Settlement of Investment Disputes if their suit against the local regulator doesn’t win them relief.
At stake is the reputation of Latin America’s most stable country, long a bastion of economic orthodoxy and pro-business policies in a region known for volatility. The casino operators see calling that prestige into question as their best chance of getting President Sebastian Pinera’s administration to reverse its plans.
The government is “not even close to sending the message that Chile is a safe place to do business,” said Wagman, who is serving as spokesman for the group. Clairvest, which owns a stake in casino operator Marina del Sol, has put on hold potential new investments in other industries in the country, Wagman said.