Latin American Operators Urged To Self-Regulate On Advertising

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Online gambling licensees in Latin America must quickly self-regulate their advertising practices to have any hope of avoiding harsh restrictions like in Spain, according to regulators and legal experts.

As new markets emerge or develop in Argentina, Colombia and Brazil, experts speaking at last week’s SBC Summit Latinoamerica in Miami warned that Spain’s new royal decree banning almost all gambling advertising should serve as a warning for operators across the region.

In Argentina’s capital city, seven online gambling permits have been issued to operators with an eighth imminent, said Sebastian Vivot, head of online gambling for the Buenos Aires City lottery authority (LOTBA). Several operators are now in the “last process” before gaining permission to launch.

It is a similar situation in neighbouring Buenos Aires Province where the seven winners of a licence-tender process were named late last year and are also waiting to go live.

The City of Buenos Aires is unique in having a specific law on gambling advertising but marketing is still a risky issue, given the complexities of an Argentine market that is being regulated on a province-by-province basis, LOTBA’s Vivot told SBC delegates.

Although provincial lottery authorities have adopted a set of best practices, it is up to operators to self-regulate before advertising becomes a more pressing political matter — and potentially an easy target — at a national level, he warned.

“If advertising runs wild, what has happened in Spain or in Italy or is happening in Colombia … the same thing will happen in Argentina, for sure,” he said.

“If the operators don’t self-regulate, and instead wait for the state to regulate, when the time comes for the state to regulate it is going to be prohibitive; it will be against the interests of the industry.”

Colombian gambling authority Coljuegos is expected to soon publish a resolution on responsible gambling, responding to a booming market that is underpinned by a series of sports sponsorships, said Juan Camilo Carrasco, an attorney with Asensi Abogados in Bogotá.

The country is already at the point of “advertising congestion”, with Colombia’s top football division and almost every team being sponsored by one of the two leading operators in the market. Ads for various other companies are also visible through regional competitions, such as the Copa Libertadores.

It was natural that operators seized the initiative on sponsorship as Colombia became the first South American country to establish a specific licensing regime for online gambling, but now the time has come for operators “to start self-regulation on advertising, so that the operators themselves are part of the solution rather than the problem”, Camilo said.

“The operators need to sit down together, make action plans together, instead of each one doing their own thing in competition with one other, to arrive at a point where we avoid the operators being the problem and the regulator having to step in with a specific regulation, as has happened in Spain and has happened in Italy, that is costing the operators millions of euros.”

Brazil, Buenos Aires In Focus

Like Colombia, Brazilian football has enjoyed a boom in betting sponsorships since a December 2018 law recognised fixed-odds sports betting as a legal lottery activity that must become subject to more specific regulation before the end of 2022.

As things stand, 33 of the 40 teams in the top two divisions of the Brasileirão football league have a betting sponsor, with competitions such as the Copa do Brasil and state-level championships also being sponsored directly by sportsbooks.

Advising SBC delegates that regulations would be coming soon, the chief lottery official in Brazil’s Ministry of Economy, Gustavo Guimarães, acknowledged that advertising and sponsorship were key issues and that the likes of Spain, Italy and the UK were “influential countries”, although he did not suggest that sponsorships would be restricted.

Closer scrutiny of advertising seems inevitable in Argentina, as the current reality of the market is “anarchic” and does not correspond with what is required by regulations, said Tomás Enrique García Botta, a partner with the law firm MF Estudio in Buenos Aires.

Among various other restrictions, a 2020 law on responsible gambling in the City of Buenos Aires limits advertising around televised sporting events and forbids gambling companies from sponsoring sports stadiums.

Celebrity influencers are also permitted only if they promote responsible gambling messaging through their appearances.

In Buenos Aires Province, all advertisements and promotions are subject to pre-approval by the regulator.

One key question is what will happen when an operator licensed in the City of Buenos Aires advertises in the province when it does not have a licence there, or vice versa, García said at the SBC summit.

“What would be the regulatory reaction when the legal regime says one thing, the reality is something else, and then there is total silence about what the consequences are for that reality?” he said.

“And then there’s the reaction at a competitive level, when everybody takes it one step further because nobody wants to get left behind — it is something to keep in mind, you are going to attract attention.”

If the operators don’t self-regulate, and instead wait for the state to regulate, when the time comes for the state to regulate it is going to be prohibitive.

Spain’s royal decree bans all TV, radio and streaming advertising within waking hours, prohibits welcome bonuses and, as of September 1, disallows any sponsorship of sports teams by gambling companies.

In a panel session discussing the decree, the head of Spanish online gambling association Jdigital noted the measure was currently being challenged before Spain’s Supreme Court on various grounds that include the discriminatory treatment of online gambling relative to public lotteries.

It is ironic that Spanish gambling company Codere can now be promoted by partner Real Madrid across Latin America but not in its home country, said Jdigital president Jorge Hinojosa.

From a public policy perspective, “it’s a decree that in no way achieves its objectives”, Hinojosa said.

Still, the advertising decree does underscore how online gambling lacks political support in Spain and there is no reason why Latin American countries would not trend in a similar direction, said Santiago Asensi, the founder of Asensi Abogados who advised Coljuegos on developing its regulatory regime.

Advertising might not yet be as urgent in Colombia but it is still be something that operators and regulators should take seriously, according to Asensi.

“Advertising should be addressed, and the sooner the better, before someone else comes and does it like has happened in Spain,” Asensi said.