Latin America's Regulatory Wave Reaching New Shores

November 6, 2023
Licensing of online gambling continues to spread across Latin America, with Peru and potentially Chile and Ecuador set to join Colombia and various provinces of Argentina in the regulatory clubhouse in 2024.

Licensing of online gambling continues to spread across Latin America, with Peru and potentially Chile and Ecuador set to join Colombia and various provinces of Argentina in the regulatory clubhouse in 2024.

Although industry attention is falling squarely on a pending bill for online betting and casino games in Brazil, various other countries are making regulatory moves of their own, according to panellists speaking at last week’s SBC Summit Latinoamérica in Miami.

Peru is set to be the next market to open, after the government published a regulatory decree in October to establish a licensing system for sports betting and online gaming. 

A law on online gambling was first approved in 2022 but then revisited by Peruvian lawmakers in July to make various amendments and technical corrections, in a move that Lima-based lawyer Carlos Fonseca Sarmiento described as symbolic of an industry-friendly approach overall.

Fonseca listed at least seven positive aspects of Peru’s forthcoming regime, including a competitive tax rate of just under 12 percent of gross gaming revenue (GGR), the ability of operators to host servers overseas and no restrictions on competition.

He said Peru’s law and regulation is also “friendly to current operators”, with established offshore sites able to transition to the regulated market over a six-month period.

That stands in stark contrast to Chile, where incumbent land-based casinos and unregulated online operators are locked in a fierce lobbying battling over the shape of a bill currently making its way through the National Congress. 

As things stand, legislation would impose a blackout period of one year on Chilean-facing sites and those operators could only later apply for a licence upon payment of back taxes.

The blackout provisions are one of two fundamental problems with the bill pending in Chile’s Chamber of Deputies, said Carlos Baeza Guíñez, a lawyer who represents international online operators in the Chilean market.

The other is a proposed effective tax rate that rises to as high as 38 percent of GGR with the addition of VAT, a rate which Baeza said was “totally unaligned with international experience”.

Although Chilean casinos are on opposite sides to online operators in terms of specific provisions, they too are “very aware of the need to regulate”, said Cecilia Valdes, executive director of the Chilean Casino Gaming Association.

Casinos are concerned, however, that Chilean policymakers may establish harsher restrictions on online gambling in response to the “violent eruption” of advertising by offshore sites that started a few years ago.

“Our challenge is, how can we avoid over-regulation and have a market that is competitive,” Valdes said. 

Although there is no clear timeline, Valdes suggested that legislation could be approved by mid or late 2024.

However, Baeza said there are various Chilean lawmakers and government officials who remain totally opposed to regulation and it is possible that the legislation could even be rejected when brought up for a vote in the Chamber of Deputies within the next few months.

Online operators are preparing for that eventuality, which would set regulation back two years, while at the same time gearing up to lobby Chile’s Senate to make amendments on tax rates and licensing provisions if the bill does receive a favourable vote in the lower house.

Baeza said the blackout provisions and back taxes gathered momentum only after one chamber of Chile’s Supreme Court in September upheld a legal challenge to block offshore gambling sites that was brought by the Polla Chilena public lottery.

But policymakers may yet be convinced to revisit the issue after Chile’s Ministry of Justice more recently shelved other legal complaints following a two-year investigation into the status of offshore gambling.

“We will be trying to convince the Senate to adopt a law of international standards, like Peru or Colombia,” Baeza told SBC Summit delegates.

Peru, Chile and Brazil are not the only Latin American countries paving their way to regulation of online gambling.

In Ecuador, Fonseca highlighted a recent law that will see taxes applied to online betting for the first time starting next year, with officials having previously concluded that a general prohibition on games of chance cannot be applied to sports betting. 

Those new taxes should portend a more complete regulation of the market in the near future, “and we hope they are good regulations”, he said.

Meanwhile, regulation continues to spread across Argentina, with Mendoza’s online market recently going live after the awarding of five local licences and the province of Córdoba is expected to follow suit before a change of government in December.

According to SBC panellists, challenges for regulators in Argentina include ongoing battles with illegal sites and grappling with a national market that has inevitably evolved into a patchwork of different regimes across the country’s 24 provinces.

Provincial regulators have to try to align their rules with those of other Argentine provinces, while Mendoza was also willing to accept certifications from other markets in order to expedite the launch of operations in its jurisdiction, said Ida Lopez, president of Mendoza’s gaming authority.

Still, the lack of standardisation remains Argentina’s “biggest challenge” and regulators are confronting a system in which operators are licensed in certain provinces but not in others, said Martín García Santillan, president of the lottery authority in the City of Buenos Aires, or LOTBA.

 “That gives us a lot of headaches,” the LOTBA president said.

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