Chilean Committee Rejects Option To Avoid Licensing Blackout

October 5, 2023
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A key committee in Chile’s Chamber of Deputies has rejected proposed language that would have allowed current offshore grey-market operators to avoid a blackout period before applying for a licence when the market is regulated.
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A key committee in Chile’s Chamber of Deputies has rejected proposed language that would have allowed current offshore grey-market operators to avoid a blackout period before applying for a licence when the market is regulated.

As a result of the move on Tuesday (October 3) by the chamber's economy commission, operators that are currently active in the Chilean offshore market will now have to wait a full 12 months to apply for a licence, once the legislation to establish a national regulatory regime becomes law.

Last week, Article 13 of the text of the online gambling bill was approved, which contains the blackout period, but operators held out hope that the transitional article that was considered this week would grant them an exception. 

Article 13 allows the Casino Gaming Superintendence (SCJ) to reject applications from operators that have offered their services in Chile or in any country without the appropriate licence. 

The transitional period article that was voted down would have allowed offshore operators to apply for a licence without waiting if they paid back taxes.

Carlos Baeza, a lawyer for operators Betsson, Latamwin, Betano and Coolbet, said that the transition article was not approved by the economy commission due to the influence of last month's Chilean Supreme Court ruling upholding an ISP-blocking order against online betting sites.  

“The government was under great pressure after the Supreme Court's ruling and with this, what was called ‘forgiveness to illegals’ was eliminated,” Baeza told Vixio GamblingCompliance.  

That Supreme Court ruling was in favour of public lottery operator Polla Chilena de Benficencia, ordering leading telecommunications provider Mundo Pacífico to block 23 online betting sites of 12 prominent operators. 

In the wake of the news, national telecoms association Chile Telcos announced that all its members would comply with the ruling upon request from the Secretariat of Telecommunications, without a court order.  

Baeza insists that “the Supreme Court's ruling has no basis whatsoever because the claim that online gambling is prohibited in the legal system is absolutely false ... . On the contrary, it is enough to read these rules to realise that there is no prohibition, neither in the Constitution nor in civil or criminal matters.”  

However, the ruling appears to have already had an influence on Chile's legislative process, making the bill that was initially introduced by the Chilean government in March 2022 far less favourable for current operators. 

The bill will now go to the Chamber of Deputies' finance commission for the purpose of reviewing the bill's tax structure for errors, and then onto the sports commission, which has been asked to review the bill in a single session.

Baeza predicts that the elimination of exceptions for current operators will make for smooth passage through both committees. 

Then the bill will go to the floor of the Chamber of Deputies for a vote, and then on to the Senate. It is expected to be voted on by the full chamber before the end of this year, most likely in November.

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