Chile's Casinos Take On Foreign Online Operators In Court

July 7, 2022
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Chile’s deeply entrenched casino industry, which began when the first casino opened in Viña del Mar in 1931, is waging legal warfare on online gaming and sports-betting platforms.

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Chile’s deeply entrenched casino industry, which began when the first casino opened in Viña del Mar in 1931, is waging legal warfare on online gaming and sports-betting platforms.

Over the past two weeks, at least five legal complaints have been filed by land-based casinos against digital gaming platforms to prevent their entrance to the country’s gaming space, absent specific legislation.

In the last week of June, Dreams SA filed a complaint against Coolbet, the new sponsors of the Colo Colo football team, for the “illegal exploitation of games of chance”.

Then, on July 4, it was reported in Chilean newspaper El Mercurio that Marina del Sol, Marina del Sol de Chillán, Latin Gaming Calama and Latin Gaming Osorno were suing international operators Betway, Rojabet, Betano, Mi Casino, Jackpotcity and Apostar Online, citing the same reasons.

In Chile, online gambling is technically not yet legal, apart from through two national lotteries. Land-based casinos are expressly prohibited from offering online games by the provisions of a 2005 casino law.

In March, legislation was filed by the former Chilean government to regulate online casino games and sports betting. That legislation would require operators to pay a 20 percent tax of gross gaming revenue and would grant an unlimited number of licences during specific licensing windows.

In early June, Chile’s Internal Revenue Service (SII) announced that it would begin to track down unregistered foreign companies, including gambling operators, that had not been paying value added tax (VAT) to the government.

The SII even went so far as to publish a list of foreign companies that were not registered and, therefore, were not in compliance, they said, with a 2020 law that taxes digital entertainment services at 19 percent. Betsson, bet365, Entain, Betway and Plus500, as well as crypto companies such as Coinbase and Crypto.com, were all on the list.

Casino groups like Dreams SA claim international operators have exploited Chile's legal limbo to offer illicit competition to licensed casino operators.

In addition to last week’s filed petition, Dreams filed a petition in March against Betsson, another sponsor of the Colo Colo team, with the Eastern Metropolitan Prosecutor’s Office.

Both of the Dreams petitions cited 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”.

At the time of the March filing, lawyers wrote: "The complaint we are filing, and also the bill being promoted by the Executive, makes it clear that these types of platforms are outside Chilean law. The problem is that this illegality — that threatens the public trust, the consumers, the prevention of money laundering, the payment of taxes — has consequences in the commercial relations and sponsorships that these platforms have, for example, with sports institutions."

The Dreams complaint from June 24 against Coolbet similarly alleges: “In short, a true online casino platform has been built, without having the corresponding authorisations from the competent regulatory entity in this matter.”

The complaint against Coolbet further requested that the president of the Colo Colo club’s parent company, Alfredo Stöhwing, be summoned to testify so he could clarify the exact nature of their relationship.

The future of Dreams SA itself, however, is also in question.

Its proposed merger with Enjoy SA is currently under investigation by the Chilean National Economic Prosecutor’s Office (FNE) for potential antitrust concerns.

If allowed to proceed, the combined company would be the largest casino operator in Chile, controlling 15 of the 26 casinos.

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