Chile's Internet Gambling Monopoly Battles Online Bill

January 12, 2023
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Chile’s online gambling monopoly has launched a scathing attack on Chile’s attempts to pass online gambling legislation in an Economy Commission hearing.

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Chile’s online gambling monopoly has launched a scathing attack on Chile’s attempts to pass online gambling legislation in an Economy Commission hearing.

The Chamber of Deputies’ Economy Commission met on Monday (January 9) for a second session to discuss the pending online gambling bill, at which state-run lottery body Polla Chilena de Beneficencia made clear during its presentation it is staunchly against the legislation.

The commission heard from: Claudia Sanhueza Riveros, the undersecretary of finance; Chile's top casino gaming regulator Vivien Villagrán; and Macarena Carvallo, the president of the board of Polla Chilena.

While Sanhueza and Villagrán presentations’ essentially laid out the facts and recent history of the proposed legislation, the opening statement of Carvallo’s slide deck, “Why is this bill inadequate?”, set the tone for a presentation that was decidedly opposed to a bill that would infringe on Polla's business.

The state-run Polla Chilena has a duopoly on the lottery market in Chile, together with the Concepción Lottery, and is the first entity to openly oppose the bill almost in its entirety, calling for more research.

Polla Chilena currently has a monopoly on regulated online gambling in Chile through its Xperto online sports-betting product. It also offers a range of online lottery games.

Although Carlos Silva Alliende of casino operator Dreams SA, who testified before the commission last week, was unhappy with the current draft of the bill and its timeline, his reticence paled in comparison to Polla Chilena’s attack.

The state-owned operator’s primary complaints are twofold: first, that online gambling will increase the number of addicts and treatment will be at the cost of the state; and second, that tax revenue from private online gambling companies will contribute less to the state than that of Polla Chilena.

The Polla president went so far as to cite a 1999 National Gambling Impact Study Commission produced for the US Congress, which allegedly concluded that “the social benefits generated by gambling in the US did not outweigh the social harm it caused”.

The lottery operator argued that the rate of gambling addiction in Chile (currently estimated at 5.4 percent of adults) will rise with the legalisation of online gaming, which the lottery insisted “implies a severe increase in the social cost of gambling that will more than offset, by several tens of millions of dollars … and this without considering the tax collection lost from Polla Chilena, the lottery, and established casinos.”

Polla Chilena reported that the lottery currently pays an average of CLP430 ($0.52) in tax for every 1,000 Chilean peso ($1.21) played, but that the online gambling bill projects CLP100 ($0.12) for every CLP1,000 played ($1.21), as private operators pay out more prizes.

The lottery then compared the two figures, extrapolating the data to mean that there will be “a much lower tax collection yield”.

Polla Chilena recommended that the Superintendency of Casinos (SCJ) register illegal online platforms and order telecommunication providers to cut off their access.

However, legal representatives of offshore operators have argued that it is codified in Chilean law that anyone has the right to access the internet.

Polla's second recommendation is to “modify the distribution of the gross revenues of Decree Law No. 1.298, that creates the sports betting system, to be operated by Polla Chilena, 22 percent of which to be destined for the National Sports Institute, minus the prizes awarded. The remaining balance of the gross revenues will be used for advertising, administration, management and sales commissions."

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