35 GameStop stores will be closing in March of this year and all of them are going to be in Puerto Rico. First reported today by CyberboxPR, the closures are being attributed to the worsening economic situation in Puerto Rico that has led to an increase in taxes from 7% to 11.5%. While there isn't any hard data on how many employees will be affected by these closures, some are estimating upwards of 400 employees will be left without jobs. GameStop cites this as a purely business decision driven by increased economic pressure, which could be attributed to the increased taxation and the under performance of key titles in 2015 like Halo 5: Guardians, Star Wars Battlefront, and Assassin's Creed Syndicate (not that these didn't sell well on the whole, but digital transactions made up a larger portion of their sales than GameStop had expected).
GameStop's director of public relations, Joey Mooring, released a statement to Gamespot clarifying the decision to close the Puerto Rico locations:
Given the ongoing business challenges and increased governmental restraints we have experienced in Puerto Rico, GameStop has made the business decision to close all of its video game stores and operations located on the island. As a result, GameStop will be exiting the Puerto Rican market by the end of March 2016. Until that time, we will continue to conduct normal business operations.
Puerto Rico will be losing its only dedicated gaming retailer, leaving residents with fewer options when it comes to obtaining games. Many have pointed out that the remaining options aren't terribly promising. For those looking to get their hands on games in Puerto Rico, Amazon, Best Buy, Toys R' Us, Walmart, and digital purchases appear to be the best retailers for gamers. However, there are drawbacks to each seller for potential customers. Amazon shipping costs can be prohibitively expensive for people as Prime does not ship to Puerto Rico. Best Buy, which does not match prices with mainland US locations, and Toys R' Us have a limited number of locations that not all island residents can access. Walmart is rumored to be pulling out of Puerto Rico soon due to the increased economic pressure, too.
What is happening in Puerto Rico to lead to this decision?
Essentially, the island commonwealth experienced a long period of people investing in its debt by buying its uniquely tax-exempt bonds and locating their businesses and manufacturing facilities on the island for special tax credits. However, about twenty years ago, the tax credits began phasing out and a few years later Puerto Rico was hit with the recession. The recession made investors more skeptical of investing in the bonds and fewer people participated in the once thriving tourism industry. This caused a lot of the money Puerto Rico had made from the booming investment years to dry up and leave the government with billions owed to creditors that have trapped it in a worsening spiral of debt. Because of its unique position as a territory of the United States, the tax code as it exists today has no mechanism for the government of Puerto Rico to declare bankruptcy, which means that the only ways of escaping the debt spiral is to pay off the debt or refuse to pay. Refusing to pay Puerto Rico's bondholders could prove to be disastrous, as that would lead to lawsuits which could put payments to bondholders ahead of payments to school districts, law enforcement, and other public departments.
In an attempt to reform, taxes have been hiked across the board in Puerto Rico and a delicate game of juggling funds between necessary debt payments has kept the territory afloat. However, that hasn't been enough. Only a handful of days ago, the governor of Puerto Rico defaulted on millions of dollars to lower-priority creditors in order to pay the highest-priority creditors and the lawsuits have begun rolling in.
This is the situation deemed by GameStop to be too financially risky to continue operations under and has Walmart thinking twice about remaining open. For a more in-depth and easily digestible rundown of the situation in Puerto Rico, I'd recommend this excellent write up by Matthew Yglesias.