The pandemic has undoubtedly shortened the waiting time for legislators to address online gambling in Latin American countries. However, the potential of the regulated sector has been an undisputed reality throughout the region, known for its passion around sports and the great demand for entertainment.
Talking to SBC Leaders, the executive director of the Ibero-American Corporation of State Lotteries (CIBELAE) Rodrigo Cigliutti assured that it’s essential for the state agencies to regulate this activity based on two fundamental reasons: to protect the security of the players on these platforms as the risks are higher when playing on unauthorised sites, and to finally benefit from what the states are currently losing by not regulating the market.
Currently, most countries in the region have regulated the industry or are on their way to do so. The challenge for them will be to find the best equation to distribute profitability to allow the continuity of the business for operators and adequate benefits for regulators.
In order to review the current regulatory situation of some of the most prominent markets in the region, CIBELAE shares a summary of what local and international companies can face there.
Starting with the Peruvian market, former President Pedro Castillo approved the Law 31,557 on August 13, 2022, which enables and regulates online sports betting and gambling. This law establishes Mincetur as the body responsible for authorising, supervising, regulating and revoking authorizations and licences.
The regulations establish restrictions such as: the participation of minors and people with gambling problems – included in the Registry created for this purpose -, and the location of land-based rooms, taking into account the distance between these spaces and educational centres and religious institutions.
In addition, municipalities may grant, with the prior consent of the Ministry, permits or licences for land-based facilities. In this framework, the Ministry of Transport and Communication is in charge of blocking unauthorised sites.
In regards to the tax regime, the tax burden applied in the regulations is 12% of the net profits. This number is the same for casinos and slot machines.
Meanwhile, the law establishes that the profits from that tax are shared between the Treasury (40%), the Tourism sector (40%) and mental health care (20%).
Undoubtedly, Colombia is the leading country when it comes to online gambling regulation at a national level. Implemented in 2016, its legislation to grant licences has been the basis and guide of many countries in the region.
This is proven by just seeing the numbers of the last three years, which exceeded the $1.6bn figure in 2020, over $3bn in 2021 and almost $5.5bn by the end of 2022, through its 16 authorised operators throughout the country.
Online gambling is so important to Colombia’s industry that it represents 32% of the total revenues of Coljuegos, the local gambling regulator. The fee that licensed operators have to pay rises to $200k and a 15% of their GGR.
The situation in Argentina is well known as it has 24 state lotteries. Each province has its own entity in charge of exploiting games such as: lotteries, land-based casinos, online casinos and sports betting, among the most relevant segments. That’s why the situation differs depending on the province or jurisdiction.
It’s worth mentioning that the Province of Buenos Aires has almost 40% of the country’s total population. If we also add the provinces of Córdoba, Santa Fe and the City of Buenos Aires – which are all highlights from this country’s industry – the percentage increases to 60%.
The following provinces have made progress in their regulations and licensing processes: the City of Buenos Aires, the Province of Buenos Aires, Córdoba, Corrientes, Chaco, Chubut, Entre Ríos, Formosa, Jujuy, La Pampa, Mendoza, Misiones, Neuquén, Río Negro, San Luis, Santa Cruz, Santa Fe and Tucumán.
Some markets have imposed a maximum number of potential licences, as in the case of the Province of Buenos Aires, which has seven, while others have not restricted the number, like the City of Buenos Aires.
According to the regulations, these licences are valid from five to 15 years, depending on the provinces, and some have the possibility to be renewed. In regards to the net profits tax, the range varies between a minimum of 2% to a maximum of 10% and a fixed sum of $100k, similar to Colombia’s system. In addition, the Congress recently approved a tax on online activity.
Currently, Mexico doesn’t have a specific online gambling legislation, but land-based facilities have the ability to offer these kinds of services, as per the regulations that go back to 1947. This same regulation allows the operation of over 30 land-based facilities.
These permits have the possibility to extend operations online or at a land-based level. The platforms that are currently operating in Mexico are linked to these land-based operations, authorised by licences to the permit holders.
That’s why, since there’s no difference between online and land-based operations, the companies that administer these casinos pay the same taxes. The Ministry of the Interior (SEGOB) is the regulatory body that supervises and controls gambling in Mexico.
Since the end of 2022, Chile has been involved in different discussions to regulate online gambling. It’s estimated that the law will be approved at the beginning of 2024.
According to the project currently under consideration by legislators, the Superintendence of Gambling Casinos (SCJ) will be responsible for regulating and controlling the industry once it’s approved.
However, once that happens, it will be renamed to the Superintendence of Casinos, Betting and Games of Chance.
It’s important to clarify that the project excludes lottery games, which will remain under the current regulation, separated from casinos and betting.
The Executive Power from Uruguay sent a bill to the National Congress that establishes that the General Directorate of Casinos would regulate the exploitation of online gambling.
This project, although it had been approved by the Upper House, was subject to observations and corrections in the Lower House and has come to a halt, at least momentarily. It’s estimated that the discussions will restart soon.
It’s also important to mention that Uruguay maintains a policy to close illegal sites, which is why implementing the new law will help migrate part of the profits from unauthorised sites to the regulated ones.
In addition, currently, Supermatch is the only sports betting platform running in the country, which is state owned.
Paraguay has a regulated sports betting market. The regulator is the National Gaming Commission (Conajzar), which supervises the implementation of the Law 1016 of 1997.
The process to grant licences started in 2019, and there’s currently 15 legal casinos and 1 bingo hall. As in Uruguay, there’s a monopoly in terms of online sports betting, which is operated by Daruma Sam, through the Apostala platform, a private company that was authorised five years ago and last year it renewed its licence for a new period.
Everyone knows that the Brazilian gambling regulations are extremely old. All types of casinos have been prohibited in Brazil for more than 80 years, by Decree Law 3,688.
Although the legislation for sports betting was approved in 2018, there are still no regulations in place and the market has been waiting for the official launch since then.
Parallel to this, the Chamber of Deputies approved the project that legalised gambling in the country, although once again the debate was stalled in Congress as it didn’t get enough consensus to address the final approval.
However, different sources assure that the decision to regulate online gambling will happen. It is known that every day that this issue goes unresolved, thousands of dollars continue to enter the illegal gambling market in the country. As a result, the State loses money, so this is a topic that it seeks to address.
While Brazil could become the main sports betting market globally, the online gaming industry is also a main attraction. So is the rest of Latin America, which is why it’s urgent that each government comes up with its own infrastructure to allow business, state and social development that the representatives of the international industry seek to establish.
As an organisation that brings together the main regulators in the region, along with operators, suppliers and more, CIBELAE is positioned as a great ally for the development of the industry in Latin America.