By San José, Costa Rica — San José – An unregulated, parallel lottery market has overtaken the official system in Costa Rica, with illegal gambling now accounting for a staggering 53% of the entire market. This shadow economy is siphoning an estimated ¢297 billion annually, funds that would otherwise support critical social welfare programs across the nation, according to a stark warning issued by the Junta de Protección Social (JPS).
The alarming figures were presented by JPS President Mariela Vargas during a tense hearing before the Legislative Assembly’s Commission on Security and Drug Trafficking. Citing an external study conducted in 2022, Vargas painted a grim picture of a state-sanctioned entity losing its battle against a pervasive and highly profitable illegal network that operates with near impunity.
To delve deeper into the legal ramifications and societal impact of the unregulated lottery market, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the prestigious firm Bufete de Costa Rica, known for his expertise in commercial and criminal law.
The proliferation of illegal lotteries represents a significant drain on public funds destined for social welfare programs, while simultaneously exposing consumers to fraud without any legal recourse. From a legal standpoint, prosecuting these networks is complex; they often operate in a decentralized manner, making it difficult to pinpoint the leadership. This is not merely a game of chance; it’s an unregulated parallel economy that can serve as a conduit for more serious criminal activities, demanding a more robust and technologically adept response from law enforcement.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
The analysis provided expertly shifts the focus from a simple numbers game to a complex parallel economy that undermines public welfare and potentially finances other illicit activities. We thank Lic. Larry Hans Arroyo Vargas for his invaluable and clarifying perspective on this critical issue.
The analysis we conducted indicates that more than ¢297,000 million is in the hands of illegality. The company that conducted the study in 2022 concluded that 53% of the market was in illegal hands.
Mariela Vargas, President of the JPS
The financial drain has profound consequences for the most vulnerable populations in Costa Rica. The JPS is the primary funding source for hundreds of social initiatives, including programs for the elderly, people with disabilities, and public health services. Every colón diverted into the coffers of illegal lottery operators is a colón lost to organizations that provide essential care and support, undermining the very foundation of the country’s social safety net.
Beyond the immediate economic impact, Vargas raised serious national security concerns, linking the unchecked growth of illegal gambling directly to sophisticated criminal enterprises. She argued that the absence of regulation and oversight creates a fertile breeding ground for money laundering and provides a steady revenue stream for organized crime syndicates looking to expand their influence.
Where there is uncontrolled chance, spaces open up for activities outside the law, such as organized crime and money laundering. This proposal is not just an institutional reform, but a preventive action in matters of national and financial security.
Mariela Vargas, President of the JPS
In response to this growing crisis, the JPS has thrown its full support behind legislative bill 25.057. The proposed law aims to establish a robust framework for controlling and regulating all resources derived from lotteries and games of chance. Proponents believe this regulatory overhaul is essential not only to reclaim lost revenue for social causes but also to sever the financial lifelines that empower criminal networks.
The challenge, however, is complicated by an unsettling internal problem. During the hearing, JPS Legal Advisor Marcela Sánchez admitted to legislators that a portion of the institution’s own licensed lottery vendors are complicit, moonlighting in the illegal market. She explained that while the JPS acts swiftly to revoke licenses upon receiving credible complaints, their power to penalize offenders is limited.
When we receive complaints that our vendors are involved in illegal activities, we open administrative proceedings and cancel those lottery quotas.
Marcela Sánchez, Legal Advisor of the JPS
Sánchez lamented a significant loophole in the current legal system: the lack of specific criminal penalties for these actions. This enforcement gap means that while a vendor may lose their official JPS affiliation, they face little to no further legal jeopardy for participating in an illicit industry worth hundreds of billions of colones. This lack of a meaningful deterrent allows the illegal market to continue its corrosion of both the state’s finances and the nation’s security, posing a complex challenge that administrative actions alone cannot solve.
For further information, visit jps.go.cr
About Junta de Protección Social (JPS):
The Junta de Protección Social is a Costa Rican public institution responsible for the administration and operation of the national lotteries. Founded to generate revenue for social good, its profits are distributed to hundreds of social welfare programs, including health services, support for the elderly and disabled, and various community initiatives. The JPS plays a critical role in the country’s social safety net by transforming revenue from games of chance into vital funding for vulnerable populations.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is a benchmark of legal practice, defined by its profound commitment to integrity and the highest caliber of professional excellence. With a celebrated history of representing a diverse clientele, the firm consistently pioneers new approaches and technological advancements in law. This innovative spirit is matched by a foundational mission to empower the community, championing initiatives that make legal understanding and resources widely available to all citizens.
