The iGaming sector is turning its gaze towards Latin America in 2023, and this year, emerging markets are expected to dominate discussions within the industry.
The iGaming sector is turning its gaze towards Latin America in 2023, and this year, emerging markets are expected to dominate discussions within the industry. Latin America is viewed as a region ripe with promise for iGaming, with countries that have already embraced the regulation of online casinos and sportsbooks experiencing steady growth, while others with favorable regulatory prospects anticipate exponential expansion in the near term.
The regulatory stance on online gambling varies substantially across Ibero-America. Notably, countries such as Ecuador and Brazil have existing prohibitions on all forms of gambling, encompassing online gambling, except for state-run lotteries. In contrast, some nations do not officially regulate online gambling but do not actively prohibit it either, resulting in a regulatory grey area.
Bolivia and Nicaragua have chosen to encompass online gambling within their broader regulatory frameworks for the gambling industry. Argentina has adopted a province-by-province approach to regulating online gambling.
Argentina
Argentina, the fourth-largest country in the Americas with a population of nearly 45 million, has a unique approach to gambling regulation. The nation's gambling regulations are structured on a province-by-province basis, allowing operators to provide their services exclusively to residents of their respective province. In provinces that have opted to regulate gambling, operators have the flexibility to offer a wide range of gambling activities.
The online gaming and betting sector in Argentina is a significant economic contributor, estimated to generate approximately $2.4 billion in annual revenues. In an effort to recover from the challenges posed by the 2020 crisis, the Argentine government recently unveiled a tax policy adjustment targeting online gambling. This change involves an increase in the federal tax on online gambling from the previous 2% to a new rate of 5%. It's important to note that this federal tax is separate from provincial and city taxes. For instance, in the province of Buenos Aires, operators are subject to a 25% tax on their gross gaming revenue, while in the city of Buenos Aires, the tax rate stands at 10% of GGR.
Argentina also has regulations in place governing gambling advertising. Advertisements within the country must adhere to strict guidelines, including not featuring or targeting minors and avoiding any deceptive or misleading content. Additionally, only authorized operators are permitted to advertise their services within Argentina.
To ensure compliance and oversight, the IPLyC (Instituto Provincial de Lotería y Casinos) serves as the regulatory authority for the province of Buenos Aires. In 2021, IPLyC took proactive steps by launching a licensing regime, establishing partnerships with both domestic companies and international operators like William Hill, Bet365, and 888 Holdings. These measures demonstrate Argentina's commitment to regulating and managing its thriving gambling industry.
Opinion: Argentina's province-by-province approach to gambling regulation provides a unique framework for operators. The recent tax policy adjustment, increasing federal taxes on online gambling, reflects the government's efforts to boost revenue post-2020 challenges. This move, though, may pose challenges for operators. It's essential to closely monitor how these changes impact the industry's growth and sustainability. Striking the right balance between revenue generation and industry sustainability will be crucial for Argentina's iGaming sector.
Brazil
Brazil, renowned as South America’s largest and most populous nation, has often been likened to a slumbering giant in the world of gambling. Presently, most forms of gambling are prohibited in the country. However, a significant development took place in 2016 when a special commission was established with the purpose of formulating regulations for the sports betting sector. While the gambling legislation was indeed passed in 2018, its implementation has faced delays. Nevertheless, there is recent optimism as President Bolsonaro has declared his intent to sign the regulation into law.
In Brazil, lotteries are under the monopoly of Caixa, and traditional horserace betting continues to be offered offline through jockey clubs. Once the new betting regulations are officially enacted, Brazil is poised to boast the largest sports betting market in both land-based and online domains across the entire continent of South America. With a population exceeding 200 million, of which approximately 63% have access to mobile technology, Brazil emerges as a highly promising destination for sportsbook operators aiming to establish a presence in this vibrant market.
The entire iGaming industry has been closely monitoring developments in Brazil with great anticipation. The regulated sports betting market in the country is projected to reach a substantial value of over $1 billion within a span of five years, underscoring the immense potential that Brazil holds for the gaming sector.
Opinion: Brazil's potential in the iGaming sector is immense, given its large population and growing mobile technology access. The delays in implementing regulations have created anticipation and uncertainty among operators. President Bolsonaro's intent to sign the regulation into law is a positive sign for the industry. Once established, Brazil is poised to become a powerhouse in the sports betting market, offering significant opportunities for operators. Brazil could be a game-changer for operators eyeing the Latin American market.
Chile
In March 2022, Chile's Ministry of Finance unveiled a proposal aimed at regulating online gambling in the country. Presently, Chile enforces strict regulations that not only prevent licensed land-based casinos from offering online services but also maintain a state monopoly over sports betting. Moreover, online casinos remain illegal under the existing framework. However, the proposed legislation, if passed, is expected to mark a significant shift by allowing for an unlimited number of licenses in the online gambling sector.
Under the anticipated regulations, potential operators seeking to enter the Chilean market would be required to pay an annual fee of $70,000 to the country's national casino gaming authority. Additionally, operators would be subject to a tax rate of 20% on their Gross Gaming Revenue (GGR). These measures aim to both increase government tax revenues and ensure the safety of players engaging in online gambling activities.
Should the bill successfully pass into law, Chile would emerge as the latest Latin American market to embrace online gambling operators, marking a pivotal moment in the region's evolving gaming landscape.
Opinion: Chile's proposed shift towards regulating online gambling signifies a major shift in their approach. The introduction of unlimited licenses and associated fees demonstrate the government's intention to balance revenue generation with player safety. If passed, this legislation could open up a vibrant new market, attracting both local and international operators.
Colombia
Colombia, boasting a population of over 50 million and ranking as the fourth-largest economy in Ibero-America, stands as one of the continent's most significant markets. The nation also holds a mobile penetration rate of approximately 56% and a well-documented fervor for football, making it an immense opportunity for online gambling enterprises, particularly online sportsbooks.
In a pioneering move, Colombia became the first Latin American country to establish regulations for online gambling in 2016. Since the inception of licensing in 2017, the gaming and betting sector has been on a consistent growth trajectory. The comprehensive 2016 regulation not only legalized nearly all forms of gambling, encompassing both land-based and online activities but also included some exceptions. Notably, online horserace betting remains restricted to only Coljuegos, Colombia's regulatory body, and private entities holding government concessions.
The industry's remarkable expansion is underscored by staggering statistics. In 2021, the estimated Gross Gaming Revenue (GGR) of Colombia's gambling market reached nearly $300 million. Furthermore, state revenue exhibited significant growth, surging by 18% in 2022 compared to the previous year, amounting to $175 million. These figures reflect the robust and thriving nature of Colombia's gambling sector.
Opinion: Colombia's early adoption of online gambling regulation has proven to be a smart move. The steady growth in Gross Gaming Revenue (GGR) indicates a thriving market. The stringent oversight ensures compliance and player protection. Colombia sets a benchmark for how a thriving iGaming industry can be built with the right regulatory framework.
Costa Rica
Costa Rica, renowned for its economic and political stability, serves as an enticing home for various international industries, with the iGaming sector being no exception. Despite laws dating back to 1922 and 1974 that prohibit games primarily reliant on chance, the country's tacit acceptance has transformed it into a central hub for the online gambling industry.
Costa Rican authorities allow the establishment of gambling companies as long as they adhere to the nation's legal framework, which restricts them from offering gambling services to Costa Rican citizens. However, they are permitted to welcome players from other regions.
The government's leniency toward gambling enterprises, coupled with the absence of taxes on internet gambling revenues, has rendered Costa Rica highly appealing to online casino operators. An estimated 450 firms associated with the iGaming industry operate from within Costa Rica.
Unlike traditional gambling licenses, regulators do not issue official licenses for online casinos. Instead, operators seek a "data processing" license, and they often fall under the categorization of call centres. Furthermore, it's worth noting that Costa Rican banks do not facilitate transactions for online gambling operators situated within the country's borders.
Opinion: Costa Rica's approach to online gambling is intriguing. The government's tolerance towards operators, coupled with the absence of taxes, has turned the country into a hub for the industry. It's an unconventional yet potentially lucrative market. Costa Rica does not have a specific regulatory framework for online gambling. While this has made the country attractive to operators, it also means there is no formal oversight or protection for players. Without a formal licensing process, operators in Costa Rica do not have an official seal of approval. This could lead to a lack of trust among players who may prefer to engage with platforms from jurisdictions with established regulatory frameworks.
Dominican Republic
In 2022, Dominican lawmakers made a significant decision to establish a new regulatory body and implement reforms in gambling taxation. This forthcoming directorate is expected to comprise experts from both the public and private sectors, although the precise implementation timeline remains pending.
The casino industry in the Dominican Republic has evolved in tandem with the country's tourism sector, a development that began in the latter half of the twentieth century. The government's objective was to diversify the nation's economy, leading to the legalization of gambling during the 1960s and 70s, along with tax incentives for private enterprises investing in tourism, including casinos.
Regulations in the Dominican Republic cover all forms of gambling, with the exception of fantasy and virtual sports betting, which neither fall under specific regulations nor are prohibited. Acquiring online gambling licenses involves an approximate cost of $230,000, and operators are additionally obliged to pay $23,000 in administrative fees.
Within the Dominican Republic, a turnover tax of 10% is enforced on operators. Furthermore, operators are mandated to provide the National Directorate of Casinos and Games of Chance with a tariff of RD$1 for each RD$100 they process. They must also invest an additional RD$2 for every RD$100 processed, designated for providing technological equipment to the directorate. Additionally, operators are required to withhold 25% of players' winnings and channel these proceeds to the national treasury.
Opinion: The Dominican Republic's recent regulatory reforms signal a proactive approach to managing the gambling industry. The establishment of a new regulatory body reflects a commitment to modernize and streamline operations. However, the taxation structure, including turnover tax and withholding of player winnings, may warrant further consideration for sustainable industry growth.
Ecuador
Ecuador
In 2012, Ecuador witnessed the closure of its land-based casinos and bingo halls, a decision that extended to the prohibition of online gambling within the country. However, in 2019, a notable entity named the Association of Former Casino Workers of Ecuador emerged, advocating for a reversal of this prohibition. The leader of this group asserted that Ecuadorian citizens routinely ventured to neighboring Peru and Colombia for gambling activities, potentially bringing an estimated $45 million in revenue back to the nation. Consequently, they advocated for the reopening of casinos. Nevertheless, it's worth noting that as of now, no legislative initiatives aimed at re-regulating the gambling sector in Ecuador have been put forth or considered.
Opinion: Ecuador's conservative stance on gambling regulation is clear. The closure of land-based casinos and absence of legislative initiatives indicates a cautious approach. While there's potential revenue, for now, Ecuador remains on the side-lines of the iGaming wave in Latin America.
Guyana
Guyana's legal landscape pertaining to gambling is primarily governed by the Gambling Prevention Act, which generally prohibits gambling activities. However, this prohibition comes with several exceptions, such as the allowance of lotteries and pool betting. In a bid to boost the country's tourism sector, the legalization of casino gaming was enacted in 2007. It's noteworthy that up to today, only two casinos have commenced operations, with a restriction that limits participation to only the guests residing in the affiliated hotels.
In the context of online gambling, Guyana lacks specific legal provisions that explicitly forbid these activities. The Gambling Prevention Act does indeed proscribe gambling within common gambling houses, a criterion that remote gambling, conducted online, does not fulfil. However, in 2013, the government took action to annul gambling licenses held by companies engaged in remote gambling activities, marking a noteworthy development in the nation's approach to online gambling regulation.
Opinion: Guyana's legal framework around gambling remains somewhat restrictive, with a focus on lotteries and limited casino operations. The annulment of licenses for remote gambling activities in 2013 reflects a cautious approach towards online gambling. It remains to be seen if there will be any significant shifts in the near future.
Mexico
Mexico, a nation boasting a population of over 120 million people and a mobile penetration rate estimated at around 60%, stands as a highly attractive prospect for both emerging and expanding online casino and sportsbook operators. With an economy ranked as the second strongest in Latin America, the country offers fertile ground for the growth of such ventures.
Mexico maintains a comprehensive regulatory framework for gambling, encompassing nearly all forms of the activity. However, it's important to note that land-based card rooms, where poker games are exclusively permitted within casino establishments, as well as fantasy sports, occupy somewhat unique positions in this framework. While fantasy sports enjoy a degree of legality, they lack explicit regulation.
Games of chance enjoy immense popularity throughout Mexico, with a particular fervour observed among bettors when it comes to wagering on football matches.
At the heart of Mexico's gambling regulatory landscape lies the Federal Gaming and Raffles Law of 1947, providing the foundational legal framework for the industry. Notably, the full regulations arising from this legislation were implemented in 2004. In 2021, Mexico further refined its regulatory approach by introducing new guidelines specifying criteria related to advertising, bonuses, and player loyalty policies for gambling operators.
Crucially, online casino and sportsbook operators are not mandated to obtain additional licenses beyond the existing authorization. Rather, they are required to establish partnerships with land-based license holders. However, potential opportunities for growth within Mexico's gambling market could emerge if the regulatory authority, known as the Directorate General of Games and Raffles, were to consider relaxing certain requirements and issuing a higher number of licenses.
Opinion: Mexico’s robust regulatory framework and strong economy make it an attractive market for iGaming operators. The recent refinements in regulations demonstrate a commitment to maintaining a well-regulated industry. However, potential growth may hinge on the Directorate General of Games and Raffles considering adjustments to licensing requirements. The lack of unique licenses for each gambling activity (i.e. online casinos, land based, online sportsbooks etc) may limit the number of available licenses and create an environment of uncertainty amongst operators and informed players seeking protection.
Nicaragua
Except for activities related to racing, fantasy sports, and wagering on virtual products, Nicaragua has established a comprehensive regulatory framework covering all facets of gambling, whether in physical locations or through online platforms. This regulatory oversight is divided between two key entities: the Control Board of Casinos and Gaming Venues and the Ministry of Finance and Public Credit.
It's worth noting that Nicaragua's gambling sector, which encompasses both land-based establishments and online platforms, underwent a significant transformation when it was officially legalized in 2001. However, despite the legalization, the industry has yet to fully realize its potential, remaining relatively underdeveloped in comparison to its possible growth trajectory.
Opinion: Nicaragua's comprehensive regulatory framework covers both land-based and online gambling. Despite legalization in 2001, the industry has yet to realize its full potential. This suggests there may be untapped opportunities for operators in this market, provided they navigate the existing regulatory landscape effectively.
Panama
Panama boasts comprehensive regulations that cover almost all facets of the gambling industry. This extends to online gambling, which necessitates local licensing for operators. These licenses grant the privilege of offering various gambling services, including sports betting, auto race betting, and a wide array of casino games. However, it's important to note that certain forms of gambling remain prohibited in Panama. This list of prohibited activities encompasses lottery games, wagering on horse races, betting on amateur events, political elections, and other events, subject to the discretion of the regulator.
To obtain a license, applicants must fulfil specific requirements and meet rigorous criteria. These include having a legal representative based in Panama, full compliance with all established rules and regulations, undergoing a comprehensive background check, and establishing a presence within the country. Moreover, online gambling operators in Panama are subject to a 10% tax on their Gross Gaming Revenue.
It's noteworthy that Panama experienced significant regulatory changes in September 2020, distinguishing itself as one of the few countries in South America with a fully sanctioned online gambling market. Historically, licensees were restricted from providing their services to Panamanian citizens. However, the updated regulations now permit operators to secure up to five ".pa" domains. Regulators anticipate the issuance of licenses to encompass between 10 and 15 operations, marking a notable shift in Panama's online gambling landscape.
Opinion: Panama's comprehensive regulations provide a clear framework for operators, with specific licensing requirements and prohibited activities. The 2020 regulatory changes allowing operators to serve Panamanian citizens represent a significant shift. It will be interesting to observe how this impacts the market and whether it attracts a greater number of operators.
Paraguay
Paraguay takes an accommodating approach to gambling, permitting nearly all forms of this form of entertainment within its legal framework. Notably, the country's sole licensed sports betting operator contributes approximately $4 million in tax revenue each year. Paraguay's gambling landscape has undergone recent legislative attention, with a bill drafted in 2016 aimed at modernizing the nation's gambling regulations, particularly concerning online gambling. In 2017, the local regulatory body, Conajzar, conducted a five-year sports betting tender.
More recently, in 2022, Paraguay has chosen to revisit this practice, indicating a continued commitment to evolving and refining its gambling industry. This proactive approach to regulatory updates suggests a growing recognition of the importance of keeping pace with the dynamic world of gambling to ensure the sector remains vibrant and well-regulated within the country.
Opinion: Paraguay's accommodating approach to gambling sets the stage for potential growth. The recent legislative attention and ongoing efforts to modernize regulations, especially in online gambling, show a commitment to keeping the industry vibrant and well-regulated. This signals a positive outlook for operators considering entry into this market.
Peru
Peru has established comprehensive regulations governing various forms of gambling, excluding fantasy sports. However, the country had not yet operationalized online gambling until a significant development on August 12, 2022. President Terrones signed a new set of regulations specifically addressing online gambling and sports betting. These regulations appoint the Ministry of Foreign Trade and Tourism of Peru as the official regulatory authority responsible for overseeing and managing these activities. This move represents a pivotal step forward in Peru's efforts to modernize its gambling sector, aligning it with contemporary trends and ensuring effective regulation in the digital age.
Opinion: Peru's recent move to establish regulations for online gambling is a pivotal step forward. The appointment of a dedicated regulatory authority underscores the government's commitment to effective oversight. This development aligns Peru's gambling sector with modern trends, creating a more secure environment for operators and players alike.
Uruguay
Uruguay has historically permitted most forms of gambling, but until recently, only the Banca de Quinielas de Uruguay had the authorization to provide online gambling services. The country is now on a path to further develop its gambling industry, signalling a shift in its approach. A significant milestone occurred on August 16, 2022, when the Uruguayan Senate voted to establish comprehensive regulations for online gambling. Under these new regulations, the General Directorate of Casinos within the Ministry of Economy and Finance will play a central role in overseeing and managing online gambling activities. Additionally, the government has taken a proactive step by creating a fund aimed at preventing and addressing issues related to problem gambling, demonstrating its commitment to responsible gambling practices.
Opinion: Uruguay's shift towards establishing regulations for online gambling reflects a changing approach. This signals a willingness to further develop the industry and provide a well-regulated environment. The creation of a fund for responsible gambling demonstrates a commitment to player safety and responsible practices.
Venezuela
Venezuela implemented a ban on casinos and bingo halls back in 2011, effectively prohibiting these forms of gambling within the country. However, in 2019, the Venezuelan government took an unconventional approach to stimulate the nation's Petro cryptocurrency. They approved the establishment of a cryptocurrency casino, which aimed to enhance the value and adoption of the Petro cryptocurrency within the country. This move represented a unique strategy to promote cryptocurrency usage and engagement among the Venezuelan population. Opinion: Venezuela's unconventional approach to promoting cryptocurrency through a specialized casino highlights a unique strategy. However, the ban on traditional forms of gambling remains in place and with no indications for a possible lift. This approach may not align with industry trends in Latin America, where regulated online gambling is gaining traction.
Latin America stands as a ripe opportunity for iGaming operators aiming to extend their footprint in South America. The region's diverse regulatory landscape, while presenting its challenges, offers a spectrum of market entry points. With a population exceeding 600 million, Latin America represents a substantial market with vast untapped potential. As internet accessibility continues to grow, a burgeoning online audience is forming. Mobile device adoption is on the rise, aligning perfectly with the industry's shift towards mobile-first platforms. Moreover, the deep-seated passion for sports, particularly football, provides a natural entry point for sports betting platforms. This cultural affinity, coupled with a general acceptance of gambling as a form of entertainment, fosters a conducive environment for iGaming operations. As the industry's landscape evolves, Latin America stands poised as an exciting frontier for iGaming operators seeking new horizons in the South American market.
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Joseph Vrachimis CEO at BetConsultant.Cy