Chile: The Guide To Grey Market Turmoil

September 13, 2022
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Chile is currently mired in a complicated web of lawsuits and pending legislation that revolve around its grey market offshore online gambling operators.

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Chile is currently mired in a complicated web of lawsuits and pending legislation that revolve around its grey market offshore online gambling operators.

Attempts to both regulate and prohibit offshore online gambling companies are ongoing, with the incumbent land-based industry launching a volley of lawsuits, including against allies of the grey market in the form of country’s powerful professional football teams.

To simplify everything that’s happened in the six months since online gambling and sports betting legislation was proposed, a timeline of recent events:

March

On March 7, five days before a new presidential administration took office, a bill regulating online gambling and sports betting was filed in the Chamber of Deputies. It established that, if adopted, gambling will be under the authority of the Superintendency of Casinos Betting and Games of Chance (SCJ), with a tax rate of 20 percent on gross income for operators and 15 percent for players. It has yet to be approved.

June

Chile’s Internal Revenue Service (SII) breaks big news, saying that it will go after “unregistered foreign companies” who have not paid their value added taxes (VAT) . The SII published an outdated list of companies it said was current as of February 14 to name and shame. Included prominently in the mix were gambling operators like Betsson, bet365, Entain, Betway and Plus500.

At the time, Diego Rodríguez, a partner at CMS Carey & Allende law firm, explained: “Rendering digital services can be done from everywhere in the world. As a general rule, those digital services are subject to a 19 percent VAT, to the extent that the service provider voluntarily registered itself at the Chilean IRS as a digital service provider, being obliged to account, declare and pay the VAT related to Chilean transactions.”

Meanwhile, the attempted merger between Chilean casino groups Enjoy SA and Dreams SA was put on further hold, as the Chilean National Economic Prosecutor’s Office (FNE) asked for 90 more business days to continue their investigation into whether the new company would constitute a monopoly.

The merger was announced in mid-January of this year but has yet to be finalised, the FNE has still not finished its investigation, which began on May 3.

The FNE said of its investigation: “The merged entity with the ability and incentives to reduce the quality of certain competitive variables in gaming services. It could substantially reduce competition.”

July

In the two weeks spanning late June and early July, land-based casinos began filing legal complaints against online gaming operators.

On July 4, it was reported in local news that Marina del Sol, Marina de Sol Chillán, Latin Gaming Calama and Latin Gaming Osorno were suing Betway, Rojabet, Betano, Mi Casino, Jackpotcity and Apostar Online. Dreams SA also filed a complaint against Coolbet. The petitions cited the Articles 275, 276, and 277 of the Penal Code, which govern the legality of games of chance and lottery, “without the authorisation of the Superintendence of Casino Gaming”.

In mid-July, the Sports Commission of Chile’s Chamber of Deputies approved a bill from deputy Marco Antonio Sulantay that would ban online betting operators from advertising at sporting events and clubs, including their broadcast channels. It specifically prohibits “the advertising and sponsorship of online bookmakers at face-to-face sporting events, broadcasting of sporting events via streaming, radio, and television, and on t-shirts and sports equipment.”

The bill, which was proposed weeks before, makes mention of the revenues of the likes of Betano, Betsson and Betway. If approved, it would interfere with the majority of first league football teams that have sponsorship deals with these companies.

In the last week of July, Chile-facing online gambling operator Latamwin removed the Chilean football leagues from its sports-betting offerings after the Casino Gaming Superintendence (SJC) issued a warning that sports betting remain illegal “unless expressly authorised … any other natural or juridical person who does so will be committing an illicit act”.

Latamwin still has its sponsorship deal with the O'Higgins football club, and 15 of the 16 clubs in the first league have a partnership of some kind with an online betting operator.

August

On August 2, finance undersecretary Claudia Sanhueza Riveros asked for and was granted an extension on the March bill that would regulate online gambling and sports betting.

The 30-day extension was needed, she said, to incorporate the gambling bill into the new president’s tax plan. It is expected to be discussed after the holiday weekend of September 17.

The National Economic Prosecutor’s Office raided the homes of executives of three casinos in the second week of August in an attempt to gather evidence on suspected collusion. The associated casinos were Dreams, Enjoy, and Marina Del Sol.

On August 31, the Supreme Court denied Polla Chilena de Beneficencia’s appeal to block 23 offshore betting operators. Polla Chilena is the public institution that runs various lottery games as well as the Xperto online betting product and has emerged as a chief opponent of unregulated online gambling operators in Chile.

September

The first week of September saw The Foundations for Gamblers in Therapy file a complaint with the Seventh District Court of Santiago against multiple bookmakers, calling them "authors of the crime of exploitation and illegal operation of games of chance”.

Among the accused were the usual suspects: Betsson; Betway; Rojabet; Betano; Mi Casino; Jackpotcity; Juega en Línea; and Coolbet. Football agent Fernando Felicevic and Pablo Milad, the president of the Association of Professional Football (ANFP) were also named.

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