Peru’s Congress on Friday (July 15) approved a bill that will regulate the operation of online gaming and sports betting, after lawmakers agreed to drop a proposed consumption tax on all online bets.
The approved bill, 2070/2021, is based on several legislative proposals from lawmakers and the Executive Branch and was passed by an overwhelming majority of 91 votes in favour, zero against and seven abstentions.
The legislation, once enacted, will authorise the Ministry of Foreign Trade and Tourism (MINCETUR) to issue licences to Peruvian companies and the local subsidiaries of foreign entities to operate both online casino games and sports betting, as well as to physical establishments to offer sports-betting terminals.
Operators will have to pay a minimum licence guarantee of approximately US$235,000 and will be subject to an effective tax rate of 10 percent of gross gaming revenue (GGR), following permitted deductions for maintenance costs from a headline tax rate of 12 percent of GGR.
The new bill also eliminates a proposed 1 percent consumption tax on the value of every bet, which drew severe criticism during the Peru Gaming Show in June.
Congresswoman Silvia Monteza Facho made note of this in her speech in Congress before voting, pointing out that the new text “eliminates the application of the selective consumption tax”.
In a statement quoting tourism minister Roberto Sánchez, MINCETUR said that online gambling “should be regulated because no one should generate activity without paying taxes".
“In addition, vulnerable sectors of the population must be protected through access controls for minors and responsible gaming policies to prevent the development of addictive behaviours,” the ministry added.
Among other details of the 22-page bill, operators will not have to host their servers in Peru as long as MINCETUR can access their systems.
MINCETUR will also be responsible for ordering the blocking of unlicensed online gambling sites in coordination with the Ministry of Communications.
Only licensed operators would be allowed to advertise in Peru or sponsor sports teams, subject to certain restrictions that may include limits on hours via regulations. Betting with cryptocurrencies would also be prohibited.
For physical sports-betting outlets, municipalities would only be allowed to issue permits for establishments licensed by MINCETUR and no betting location would be permitted within 150 metres of a school.
Under the law, those involved in sports, such as athletes, coaches and referees, will not be allowed to participate in sports betting. Online gambling operators would have to promote responsible gambling and offer self-exclusion, while prohibiting access to those on a central exclusion list currently applicable to Peru’s land-based casinos and slot halls.
Violating the law could result in revoking licences, permanent disqualification or a ten-year suspension. Punitive fines will range from approximately $1,177 to almost $236,000.
MINCETUR also estimated that the Peruvian government would generate around US$160m a year in tax revenue “to be invested in the reactivation of tourism, in addition to public infrastructure works and promoting sports”.
Some 20 percent of the generated revenue from tax will be earmarked for the Public Treasury, a further 20 percent for the Peruvian Institute of Sports, 20 percent for the Ministry of Health for mental health programming and the remaining 40 percent will go to MINCETUR.
After its approval by Congress, the bill now must be signed into law by President Pedro Castillo. The President is expected to ratify the legislation, as his Cabinet of Ministers endorsed the proposal after it was first submitted as a draft by MINCETUR earlier this year.
The law will enter into effect 60 days after it is published in the official gazette. A further decree will follow from MINCETUR within 120 business days of publication to regulate the law.
Friday’s congressional vote means Peru now seems set to join fellow Latin American jurisdictions Colombia, Panama, Mexico and various provinces in Argentina in fully regulating online gaming and betting.
The country’s online gambling market is forecasted to be worth up to US$717m in gross revenue for year five of operations, according to VIXIO GamblingCompliance’s Latin American Online Data Dashboard.