Argentina's Online Operators Face Challenges Of Inflation, Jurisdiction

May 23, 2022
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Operators in Argentina’s nascent online gambling market face a series of challenges, including currency inflation and divergent regulations in the city and province of Buenos Aires.

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Operators in Argentina’s nascent online gambling market face a series of challenges, including currency inflation and divergent regulations in the city and province of Buenos Aires.

Argentina’s history of casinos, bingo halls and a rapidly increasing rollout of online gambling regulations have made it a new Latin American hotspot for those in the gaming industry.

But given its current rising inflation and squabbles over jurisdiction between Argentina’s 24 autonomous regions, the country presents its own set of unique challenges.

The first hurdle involves the country’s gambling regulatory system, which does not apply nationwide but is instead determined by each province.

Each of the 23 provinces and the capital City of Buenos Aires (CABA) have their own rules and governance.

CABA and the Province of Buenos Aires remain the most attractive markets due to their large populations and relatively liberal approaches to online gambling.

Unlike other provinces where online gambling is legal, CABA and the Province of Buenos Aires allow independent online operators to be licensed, whereas others such as Santa Fe require any online operators to have pre-existing land-based casino operations.

Legal online gambling kicked off in CABA late last year, with eight operators now licensed in the city including Codere, Betway, Betsson and bet365.

The latter two operators are also among seven that have received licensing approval in the larger Province of Buenos Aires and are among the few to have launched there so far in 2022.

Argentina’s currency, the Argentine peso, also presents multiple issues as it has historically been very unstable. Currently, multiple exchange rates exist outside the official published rate and in 2021 the inflation rate was 50.9 percent. The unofficial but commonly used “blue rate” values the peso at nearly half of its officially published value.

According to Argentine gambling law expert Tomás Garcia Botta, the volatility of the peso makes it complicated for any international business to operate in Argentina, not just in the gambling market.

“If you can secure a way of bringing money into the country and getting a better [legal] exchange rate, then it’s good for investment because any money that you have will be worth twice as much in pesos,” he said.

“On the other hand, whenever you need to pay foreign suppliers or distribute dividends, then it could be challenging because of the authorisations that you will need and the disclosure of documents needed in order to get payments authorised.

“It creates a whole new dimension of issues to consider when doing business here. It is important to understand these issues in advance so as to be able to navigate through any restrictions mitigating their impact on the business."

In terms of gambling spend, Argentina’s regular bouts of currency inflation historically mean that people with disposable pesos to spend usually do spend them, as any savings can quickly devalue.

It is tricky to say whether this leads to a healthier gambling market in general in terms of play activities, according to García Botta.

“From one side, yes, the answer could be that the inflation and the instability of the currency may encourage people to spend any spare pesos they may have. But at the same time, an ever increasing amount of people struggle each month to make ends meet as soaring prices reduce their purchasing power.”

Growing poverty — according to Al-Jazeera, 42 percent of people live below the poverty line — has led both CABA and the province to implement strict gambling rules for those on social welfare.

In CABA, if a person receives state aid, usually on an issued debit card, they cannot use funds from that card to gamble.

The province goes one step further, requiring that if a person is the beneficiary of any state aid program then they cannot gamble at all. The problem lies in enforcement, as there are no mechanisms in place to determine if a person is receiving state aid or not. It is largely up to the player to self-police.

Above and beyond that, García Botta believes that one of the biggest concerns facing gambling operators in Argentina in the coming year will be the challenge that CABA and the province have in preventing players from circumventing each other’s laws by travelling to the other to place bets.

According to the laws of the Province of Buenos Aires, anyone with an address in the province is only authorised to gamble on a province-licensed website, whereas anyone physically in CABA can play on its approved sites.

This could be legally interpreted to mean that operators licensed in the province cannot accept players who are not domiciled in the province and underscores the challenges for operators who must comply with different regulations within one country.

With other provinces including Mendoza and Córdoba also set to regulate online gambling under their own legislation, the complexity is also set to be multiplied in the near future.

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