Peru's Online Gambling Law Faces Harsh Criticism For Perceived Loopholes

July 20, 2022
Peru is on the cusp of legalising online gambling after the approval of Bill 2070/2021 in the dead of night on Friday, but criticism of the new law has already begun.


Peru is on the cusp of legalising online gambling after the approval of Bill 2070/2021 in the dead of night on Friday (July 15), but criticism of the new law has already begun.

In a statement, the Peruvian Association of Sports Betting (APADELA) that represents operators including Betsson, Betcris and Apuesta Total expressed displeasure at Article 40 of the legislation, which was approved almost unanimously in Peru’s Congress last week.

That article specifies that legal entities within Peru, as well as the local subsidiaries of companies incorporated abroad, will be subject to a headline 12 percent tax on net winnings from online gaming and sports betting.

Elsewhere, however, the legislation appears to allow both those groups and foreign operators based outside Peru to apply for licences.

APADELA has interpreted this to mean that about 100 foreign operators that do not have a legally functioning branch in Peru but are present in the online market would not be subject to the tax under the new legislation, which awaits the signature of President Pedro Castillo.

The association described the situation as “unfair competition, violating fiscal neutrality and equality before the law, negatively impacting the economic livelihood of more than 275,000 people who work or find their economic livelihood in this activity”.

Peru gaming law expert Carlos Fonseca Sarmiento cited similar concerns.

In an op-ed for Yogonet, Fonseca wrote that the 12 percent online gaming tax, created in Chapter 10 of the law, would only apply to companies domiciled in Peru, and not those based abroad.

In several places, the language of the 22-page bill also appears to conflict with a summary of amendments to the proposal added as an appendix to the measure by a congressional committee.

Among other things, that summary states that an initial proposal to apply a 1 percent consumption tax to the value of every bet was eliminated from the final version.

According to Fonseca, however, the bill merely left out the rate of the consumption tax, which is still referenced in six separate articles of the bill approved in Congress on Friday.

Constante Traverso, the head of the Peruvian Association of Games of Chance (APEJA), raised the same issue and told Yogonet that applying both the “openly antitechnical” consumption tax and the gaming tax would create “confiscatory effects” for operators.

Fonseca lambasted the final legislation, branding it “a Frankenstein Law” that was cobbled together from several earlier bills in the middle of the night, before being voted on by Congress members at around 2am in the morning.

Other issues with the bill, he said, include a failure to establish criminal penalties for unlicensed operators or regulate games of skill.

Fonseca wrote that the legislation “must be amended as soon as possible”.

Additional reporting by James Kilsby.

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