Chile set to start regulating its online sports betting market

Reading time 4:29 min

On Monday, March 7, the Chilean government introduced a bill that intends to regulate online sports betting throughout the country.

In January, the sites debuted with a bang among the main national soccer clubs: while Universidad de Chile announced Betano as its main sponsor for the next three years, Colo Colo did the same with Betsson, and teams such as Everton, Unión La Calera, Coquimbo Unido, Ñublense and Audax Italiano featured Betway, a subsidiary of the French Super Group, on their jerseys.

It should be noted that the spirit of the law in Chile is clear: all gambling is illegal unless it is authorized by the State through its corresponding agencies. And the local authority has only given the green light to the Polla Chilena de Beneficencia, the Chilean lottery Lotería de Concepción, the racetracks, and 21 operational casinos in the country.

On Monday, the State took a step forward to expand this list and introduced a project that seeks to regulate the activity, an initiative that had been announced last year, but that is only now seeing the light of day.

"Through this project, we will set clear rules for an industry that is not regulated in Chile. Thus, we will protect the users and regulate the operators, who will now have to pay a specific tax, which will allow the Treasury to collect approximately $55 million per year", the Undersecretary of Finance, Alejandro Weber, told Pulso magazine.

According to figures of the Superintendency of Gaming Casinos (SCJ), there are more than 900 websites and platforms that allow online betting in Chile, hosted abroad, and that operate a market of around $150 million.

"During 2019 and 2020 there were the most significant growth spurts because the possibility of socializing was limited. This was also due to the replacement of players: now those who are digital natives are entering," they pointed out from the industry. "2020 was exceptional in many ways. The pandemic contributed to a faster digitalization of entertainment and, consequently, a higher degree of conversion from in-person to online games (...) In the rest of the world, Chile -together with Peru- were the main contributors to the region's growth. Activity levels continued to be high, and deposits were at the highest level ever", according to the recent balance sheets from Betsson, which has the former World Cup player Iván Zamorano as the face of the company.

"In Chile, online gambling is totally prohibited and outside the regulatory framework, and it is considered an illegal and dishonest competition," explained the president of the Chilean Association of Gaming Casinos, Mariana Soto.  

"We are concerned about the growth of this type of operators, who are not obliged to respect the Chilean laws", added the corporate attorney of Grupo Dreams, Carlos Silva. These platforms, they pointed out, have no obligation to take measures to prevent money laundering, and are not obliged by Sernac to respect consumer laws, nor are they required to pay prizes and taxes.

In 2021, in fact, the tax contribution of the authorized casinos was $90,000 million (about US$ 111.4 million), according to data from the Superintendency, a payment from which the online rooms are today excluded.

Teams and sports betting

On Monday, online platforms sponsor 11 of the 16 first division teams in Chilean soccer, a figure that was non-existent two years ago. In addition to the aforementioned bookmakers, Juega En Línea, BetsAmerica007, and Coolbet are also present.

In the first quarter of 2020, Betsson sold $ 8.5 million in the region, while in the last quarter of 2021 it increased to $27 million. The Swedish group opened offices in Colombia, acquired 50% of the payment platform JDP Tech and closed advertising agreements with several clubs, including Colo Colo and the Chilean Primera B National Championship.

"This is another important milestone for Betsson in Latin America, and this sponsorship is one of our main focuses of activity in communication and marketing for Chile," the company stated at the time. It also joined as a sponsor of the Peruvian First Division league, and as a regional advertiser for Copa America.

"The online platforms intend to give an appearance of normalcy and legitimacy by associating with sports clubs, and thus gain consumer confidence and, at the same time, not comply with any of the obligations established by the Superintendency of Gaming Casinos", said the Casino Association, and added: "They are using the prestige of these clubs to hide an illegal activity".

Another industry player echoes the same idea: "One does not understand the reason for seeking sponsorships from companies that do not report their transactions to the Financial Analysis Unit (UAF) or that cannot guarantee that children are not playing. One would hope that the promoters of such a beloved sport would encourage respect for the rules of the game".

The key points of the new project

The initiative presented by the government seeks to remedy all the apprehensions described above. It will allow companies that obtain a general license for five years, renewable, or a temporary license for six months, non-renewable, to operate any betting or gambling activity, with the exception of lotteries and those that contain or transmit graphics, messages, or sounds that threaten public order, national security, people's honest livelihood, or are targeted at minors.

The companies must be established in Chile and report the origin of the funds necessary to operate the business, detail their shareholders and final beneficiaries, as well as be obliged to report suspicious operations of money laundering.

Anyone who has a user account -which will require to be of legal age and have a Unique Tax Number Register- will be able to play. The Superintendency of Gaming Casinos (SCJ), which will now be renamed Superintendence of Casinos, Betting and Gaming, will be in charge of the supervision.

The Government explained that the companies that operate remote games will have to pay a specific tax, as a substitute of VAT, of 20% of their gross income; a license fee of 1,000 UTM per year for those who have a general license and 100 UTM for those who have a temporary license. And if the purpose of the Online Betting Platforms (PAL for its initials in Spanish) is to develop sports betting, they must pay 2% of their annual gross income to the National Federation of the sport that is the object of the bet. In addition, the operating companies must spend at least 1% of their annual gross revenues on actions aimed at promoting the development of responsible gambling.  

Users will also be subject to a tax: they will have to pay 15% of their income obtained in this activity when withdrawing money from their user account to their personal account. "This is a good project, which we hope will be approved as soon as possible", concluded the Undersecretary of Finance, Alejandro Weber.

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