This week, the Chilean government has moved forward with a legislative initiative aimed at authorizing online betting and gaming. On Tuesday, the country’s Chamber of Deputies approved by a large majority a bill that regulates the operation of interactive gambling platforms and advanced it to the Senate.
The legislation aims to promote a competitive online market besides the current legitimate gambling options in the country. Particular attention is being paid to player safety mechanisms. Furthermore, the bill seeks to ensure a transparent online gambling environment and take advantage of the tax revenue currently lost to unlicensed offshore operators.
In her speech, Heidi Berner Herrera, the Undersecretary of the Ministry of Finance, underlined the important goals of the legislation, including preventing crimes and money laundering, while simultaneously protecting consumers and underage individuals.
According to the legislation, the Superintendency of Gaming Casinos (SJC) will receive new powers to monitor the online betting and gaming sector effectively. Additionally, The Financial Market Commission (CMF), the Internal Revenue Service (SII), and the Financial Analysis Unit (UAF) will also be involved in the regulation of the market. The regulatory design envisions severe penalties for operators who remain in the illegal sector.
The newly introduced regulations represent a substantial improvement to the current state of affairs, where platforms operate without due supervision, paying taxes, traceability of funds, or consumer protection mechanisms.
According to information from the Superintendency of Gaming Casinos, there are more than 900 gambling platforms that offer illegal services in Chile. As per the new regulations, stricter measures will be introduced concerning payments. Additionally, businesses will be prohibited from opening bank accounts in the country if they operate without a license. Internet providers will be obliged to block access to illegitimate platforms and authorities will be able to exchange information.
Under the proposed regulatory framework, a National Responsible Betting Policy will be introduced, headed by the Superintendency of Gaming Casinos and the Ministries of Finance and Health. Its main focus will be on responsible gambling, the prevention of gambling disorders, and the establishment of advertising and marketing conditions for operators. Players and bettors will have at their disposal self-exclusion mechanisms.
The Bill Introduces New Tax Requirements
The Chamber of Deputies classified online gambling as a “digital entertainment service”. As such, online gambling operators will be required to pay VAT at a rate of 20%, similar to their land-based counterparts.
There will be some extra taxes imposed on the activity of online gambling operators. The approved bill introduces an annual tax of 2% of gross income, with revenue directed toward the National Sports Institute. The funds will be distributed between sports federations, the Olympic Committee, and the Paralympic Committee.
A tax increase of 1% has been added aiming to cover the costs associated with the establishment and maintenance of responsible gambling initiatives in Chile.
The Chamber of Deputies advanced the legislation without any delays, indicating the pressing need for the regulation of the market. However, as the holiday season approaches, its progress in the Senate may be held back.
