Peru Preparing Law For Online Gambling

March 7, 2022
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Peru's tourism ministry has submitted a draft law to regulate online gambling and sports betting with the aim of raising more than $40m in annual tax revenue.

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Peru's tourism ministry has submitted a draft law to regulate online gambling and sports betting with the aim of raising more than $40m in annual tax revenue.

The Ministry of Foreign Commerce and Tourism last week presented a legislative proposal for online gambling to the Cabinet of Ministers of President Pedro Castillo for possible introduction in the National Congress.

The gambling department within the tourism ministry regulates land-based casinos and slot halls, but currently lacks authority for online casinos and sports-betting outlets.

Officials are known to have been developing online gambling legislation for more than five years, without a government-backed bill ever actually being introduced in Congress.

A full copy of the ministry's draft law is not publicly available.

According to a statement last week from the ministry, however, the measure will require all operators to obtain a licence, have a legal representative in Peru and operate via a .pe web address.

Unlicensed operators would be banned from advertising or sponsorships in Peru.

The measure would also regulate physical sports-betting outlets, but internet gaming halls would be prohibited.

Operators would be taxed at a rate of 12 percent of gross gaming revenue (GGR) and have to collect a 1 percent consumption tax from players.

"It's essential that these operations are controlled in a holistic way, paying taxes and complying with appropriate conditions that guarantee the safety of users through transparency and responsible gaming policies, as is the case in Colombia, Mexico, Argentina and a large part of the United States and Europe," the ministry said in a statement on its website.

Tourism minister Roberto Sanchez said the government estimated collecting annual tax revenues of around 160m soles ($42.6m).

"Not only can this be invested in the relaunch of the tourism sector, but also in public infrastructure projects, particularly to promote sports," Sanchez said in the statement.

In a presentation last October, the tourism ministry's General Directorate for Casino Gaming and Slot Machines (DGCJMT) noted how online gaming platforms and sports-betting outlets are not expressly prohibited by existing Peruvian gambling laws and estimated them to receive more than $1m in bets annually.

It said the forthcoming draft law would establish web-blocking for unlicensed operators, in addition to advertising restrictions. The bill could also allow for a 2 percent discount from revenue taxes for systems costs, implying an effective rate of 10 percent.

After its presentation to ministers last week, the online gambling bill will now be discussed by the cabinet in an upcoming meeting, and then could be introduced as a government bill in Congress.

Its prospects before lawmakers are not clear, however.

President Castillo's Free Peru party does have a majority in Congress and the president narrowly survived an impeachment attempt in December following a series of corruption allegations involving government officials.

Castillo has also reshuffled his cabinet on multiple occasions since taking office in July and faces mounting disapproval ratings.

The presentation of the draft law for online gambling also comes after the departure of Peru's chief regulatory official for land-based gaming, following more than 15 years at the helm of the DGCJMT.

Manuel San Roman Benavente's tenure concluded on February 28, according to a resolution signed by Peru's tourism minister. San Roman Benavente is widely respected across Latin America for his role in implementing a 2006 law that formalized and regulated Peru's land-based gaming market.

He was replaced on the same day as his departure by Eduardo Alfonso Sevilla Echevarria, a former government official and head of Peru's tourism chamber.

Prior to the pandemic, Peru's regulated gambling market included 17 casinos and more than 85,000 machines in slot halls, bars and restaurants. The sector was hit hard by COVID-19, however, with casinos and gaming halls only able to reopen at full capacity last week.

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