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Chile-facing online gambling operators are switching their immediate lobbying focus from a slow-moving bill to establish a licensed market to instead delaying a separate proposal that threatens to prohibit their current activities.
Leading international operators have advocated for several years for Chile’s National Congress to approve a pending bill to establish a national licensing system, similar to those of Peru, Brazil and other Latin American countries.
But as that bill languishes in Chile’s Senate, operators are now more focused on a separate legislative proposal that would tighten existing gambling prohibitions and expressly ban any form of unauthorised online gambling until a new regulatory regime is put in place.
The anti-gambling prohibitions are included in a broader economic intelligence bill that aims to tackle organised crime in Chile.
First introduced in 2023, the Senate approved the economic intelligence bill on March 25 and is now being considered on an urgent basis in the lower house of Congress, the Chamber of Deputies.
Article 24 of the 61-page bill specifically would amend Chile’s Penal Code to extend existing prohibitions on illegal lotteries and “gaming houses” to any unauthorised game, bet or drawing that is determined by a future event or unknown outcome and is “generated by any medium or mechanism, either mechanical or electronic”.
The bill would establish stiffer criminal sanctions and monetary penalties for individuals and executives involved in illegal gambling, with companies liable for fines of double the profits they earn from unlicensed gaming activities.
Passing a bill to ban online gambling before legislation to regulate the industry would be a “catastrophic” move, according to Carlos Baeza, a Santiago-based lawyer who represents a coalition of leading online gambling operators in Chile.
Baeza pointed to a recent study that showed 25 prominent operators controlled approximately 88 percent of an unregulated Chilean market worth up to US$3.1bn in annual revenue.
The vast majority of those 25 operators are eager to become licensed and pay taxes, but the Chilean market would be left to disreputable and illegal operators if the new legal prohibitions are enacted.
“If the economic intelligence bill is approved first, online gaming will be automatically banned and the industry as we know it will disappear,” Baeza told Vixio GamblingCompliance.
Consideration of the economic intelligence bill comes amid continued debate as to the legal status of online gambling under Chile’s existing laws.
Last month, public prosecutors confirmed that they were ending a three-year investigation into leading offshore operators active in the Chilean market without bringing any criminal charges.
That was celebrated by the coalition of operators as vindication of their position that online casino games and sports betting are not illegal under current law.
However, those statements have also led to fierce pushback from advocates for licensed land-based casinos who stress that a refusal to bring charges is not the same as a court ruling or some other form of legal determination that online gambling is legal.
Clashes With Chilean Casinos
Speaking at this month’s SBC Summit Americas in Florida, the executive director for the Chilean Casino Association (ACCJ) acknowledged the pending economic intelligence bill to prohibit all online gambling but said the lobbying priority of incumbent casinos was still to establish a licensed and regulated market in Chile.
The recent launch of a Chilean-facing offshore site promoted by famous footballer Arturo Vidal has further confused consumers as to whether online gambling is legal and underlined the need for regulation, the ACCJ’s Cecilia Valdés told SBC Summit delegates.
That episode has seen Vidal come in for intense criticism as he remains the face of the Juega Con El King platform, even after it advertised the opportunity for Chileans to place bets on whether the midfielder would receive a yellow card for a game he was involved in.
Approval of legislation to regulate online gambling “surprisingly, has taken much longer than we were expecting”, said Valdés, referring to a bill that was approved by Chile’s Chamber of Deputies in December 2023 but has not made any further progress since it cleared one Senate committee more than a year ago.
The slow progress is particularly frustrating for Chile’s licensed casinos as they are expressly prohibited from offering online gaming under the 2005 law that governs their land-based operations, Valdés said.
“In Chile, we can’t keep allowing this to go slowly,” she said. “We need a new law today.”
Representatives of unlicensed online operators are not exactly on the same page as casinos when it comes to specific provisions of the bill that currently would apply back taxes and a potential one-year penalty box for any offshore companies seeking to apply for a Chilean licence.
Still, they share the same sentiment overall.
Chile has a long history of regulating different forms of gambling, and the current government has previously stated its support for extending the same approach to online gaming, said Baeza.
“We hope that the Ministry of Finance will maintain this stance, move forward with the approval of the bill to regulate online gaming and resolve the conflict generated by the early approval of the economic intelligence bill,” he said.
“Especially now that the country is going through a complex fiscal situation and the taxes that this industry could generate once regulated are sorely needed.”
