Chile Operators Argue Over Online Gambling Tax Rates

February 13, 2023
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Negotiations about the shape of Chile’s online gambling bill continue behind the scenes of the congressional Economy Commission, with offshore operators and land-based casinos duking it out over tax rates and licence conditions.

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Negotiations about the shape of Chile’s online gambling bill continue behind the scenes of the congressional Economy Commission, with offshore operators and land-based casinos duking it out over tax rates and licence conditions.

Cristina Romero de Alba, a lawyer at law firm LOYRA, who spoke at the Chamber of Deputies' Economy Commission last month, told VIXIO GamblingCompliance at the ICE conference in London last week that the major sticking point remains the player withholding tax that would apply to all winnings from online betting and gaming under the current form of proposed legislation.

“It doesn’t work from a bureaucracy and logistics perspective. It won’t work and, to be honest, it imposes an additional burden on both the operators and the players,” she said.

Her point was echoed a little over a week ago by Chilean lawyer Carlos Baeza in his statements to the Economy Commission, in which he argued that the tax would encourage players to gamble on illegal offshore sites.

Romero also cited the player tax as untenable given Chile’s popularity with tourists, who do not have Chilean IDs and therefore, in the current draft, could not legally gamble.

It also would mean that tourists playing in brick-and-mortar casinos would not be able to convert to online playing customers. If they wished to continue to gamble online they would have to do so offshore.

Meanwhile, land-based casinos — a powerful bloc in the country — are lobbying for a five-year window during which only incumbent operators holding land-based licences would be able to be licensed online.

“Frankly, I've never seen anywhere in the world something like that working out. They should regulate as soon as possible,” said Romero.

Currently, there is no condition to have any land-based prior experience or a limit on the number of licences that will be granted. Under the proposed legislation, once the draft bill is approved, potential operators will have one window to submit their application for a licence, and after that window closes there will be a two-year period when no new applications are accepted.

The current proposed online gambling tax rate is 20 percent of gross gaming revenue (GGR). Romero expressed hope that the rate would be lowered to closer to 15 percent, although she acknowledged that it was a longshot.

“That's where you break even between channelling and actual tax revenue. But we told [the commission] all the different studies that there were so we'll see, but I think it's good to stay up to date. They have Peru which is 12 percent as a reference,” she said, alluding to Peru’s decision to adopt a 12 percent rate in its new online gambling law despite a rival bill which had a tax rate of 20 percent.

The result of these policy debates will not be known until at least March, when the Economy Commission will resume work. After the bill is passed in the commission it will land in the Senate for further deliberation.

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