The Chamber of Deputies of Chile, by a large margin, has approved a bill to regulate online gambling, iGaming Business reported December 15. Next it will be sent to the Senate.
The lower house had acted with dispatch and urgency, but the Senate may take a more deliberate approach, especially since the holidays are here.
The goal is to create a competitive online market while protecting vulnerable consumers from addiction. This is good news for operators, who for the past few months have been forced to stop operating in Chile due to a Supreme Court ruling.
The bill, if it becomes law, would widen the powers of the Superintendence of Casino Games (SCJ), the Commission for the Financial Market (CMF) and the Internal Revenue Service (SII). It would also authorize the creation of a National Policy on Responsible Gambling, with input from the ministries of finance and health. It will set policy on operator advertising and promotions.
It authorizes a license fee of CLP64.2m (£58,147/€67,744/$74,189) per online wagering platform.
A value added tax (VAT) will apply to online gambling, as it is considered a form of digital entertainment. However, operators will be able to recover tax credits for advertising and software.
The bill also requires online operators to set aside 2 percent of gross gaming revenue (GGR) to sports. This will be evenly divided between the Chilean Olympic Committee, Chilean Paralympic Committee and National Sports Institute.
Online operators, like brick-and-mortar casinos, must pay a 20 percent tax on profits, and contribute 1 percent of annual gross income to responsible gaming.
Since the bill brings regulation to a sector that has been unregulated, it also provides methodology for cracking down on the illegal and black market operators, i.e. anyone without a license. These include banning advertising of anyone but legal operators.
Also, illegal operators are not allowed to have bank accounts registered in the country and Internet Service Providers (ISPs) are required to block such planforms and the downloading of their apps. Penalties will be severe for illegal operators.
At the same time, greater transparency will be required for identifying the actual owners of online platforms and their sources of funds.
Minors will be protected by specific prohibitions on opening gambling accounts without proper ID, while ads that target youth are prohibited.
Persons in sports, such as players and league organizers, are prohibited from betting on games.
Persons will be able to self-exclude themselves from gambling, and be provided ways to set spending goals while the superintendency will be able to raise red flags over risky wagering patterns.
The government’s hand was forced in September when Chile’s Supreme Court unanimously ordered it to block access to all online gaming platforms, as SBC News reported. In doing so the court upheld a challenge by the state-owned lottery and pools operator Polla Chilena de Beneficencia, which sought a ruling that online gambling was an illegal activity.
The Court wrote: “Online gambling is prohibited in our legal system, treating the debts contracted in said games of chance as an illicit object, as well as criminally sanctioning those who enable said activity. as well as those who participate in it.”
The state monopoly said its hand was forced because the government had not passed any laws pertaining to online gaming and the Superintendency of Gambling Casinos (SCJ) only had authority on land-based casinos and the national lottery.
Before that ruling, Chile had been taking steps toward a regulated online market. The government had ordered several ministries to work on legislation in cooperation with the Chamber of Deputies.
In July the Ministry of Finance had unveiled proposals that included an annual fee of $70,000 and a 20 percent gross tax. One delaying factor was a dispute between the National Association of Professional Football (ANFP) and the Ministry of Justice over wagering sponsorships, which the Ministry opposes.
