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Chile: Now on the final step of legalization of Online Gaming

Chile’s ongoing efforts to legalize Online Gaming platforms are one step closer to coming to fruition, as the bill that regulates online gaming and betting was approved in the first step by the Chamber of Deputies.

Ivan Kurochkin, Partner and Head of Eastern Europe Desk, shares his insights:

Currently, there is no actual law that regulates online sports betting, and Chilean players have been able to participate in this activity from international betting sites without having to worry too much about any sort of legal framework or restrictions.

The mission to create the legal blueprints for online gaming and sports betting can be traced back to its official origins in March, 2022, when ´Boletin 14838-03´was emitted, and with it, the “Law Project of Online Bets” had officially begun.

Creating a competitive market for online gambling, more thorough control over access to betting sites, and protecting the players’ well being were some of the main goals from the Law Project.

Since then, the path for creating a legal framework has not been easy and without its fair share of opposition and constant debates, in some cases even arguing against the existence of the law itself under the argument that creating a law that promotes online gaming will reflect negatively to physical casinos, and become harmful to the tourism sector in the country.

In the most recent developments of the Law Project of Online Bets in 2024, The Ministry of Finance and the Superintendency of the Gaming Agence HAVA have presented the finally approved draft of online gaming and betting before the Senate Economy Committee.

What are the main regulations?

● Operators must establish themselves as closed corporations in Chile with a maximum of 10 shareholders and identify beneficiaries.

● Gaming platforms must provide remote access to their systems for effective supervision by regulatory bodies.

● Companies that operate physical gaming casinos may apply for licenses for gaming platforms, by creating a company with a single business activity.

● It is illegal to have a bank account in the country for any entity that operates without authorization.

● Internet providers are required to block access to unauthorized platforms

● Responsible gaming measures are introduced, including increased tax rates and prohibition of underage participation.

● Advertising and promotion regulations aim to protect users, including restrictions on targeting children and adolescents.

● Players, athletes, presidents of federations or organizations, boards of directors, organizers, coaches, representatives, among others who may interfere in the results, are restricted from participating in bets.

License Cost and Tax System

The general license fee for operators amounts to €67,744. This is to operate one single platform.

The activity will be subject to a 19% Value Added Tax (VAT) due to its classification as a digital entertainment service. This VAT imposition allows operators to reclaim tax credits for the goods they procure and the services they engage.

Similar to the taxation structure for physical casinos, a specific tax rate of 20% will be levied on Gross Gaming Revenue (GGR).

Authorized platforms must pay an annual tax rate of 2% of gross income or bets placed.

Advertising Restrictions

● Advertising or promotion through media channels is restricted to authorized platforms only.

● Children and adolescents are prohibited from opening or maintaining accounts. Proof of identity is required for account registration.

● Participation in betting activities must not be motivated by betting objects.

● Advertising or promotion targeting children and adolescents is prohibited.

● Using payment instruments in their name is strictly prohibited.

What is next for operators and Chile?

The new regulatory framework will entail issuing administrative license authorizations and imposing strict penalties on those operating illegally. The Law Project will also grant additional authority to entities such as the Superintendency of Gaming Casinos, the Commission for the Financial Market (CMF), the Internal Revenue Service (SII), the Undersecretary of Telecommunications, and the Financial Analysis Unit (UAF).

For now, operators will have to wait for the draft to be fully approved which will allow the newly formed Superintendency for Casinos and Gaming in Chile to implement the regulatory framework to start the license application process, which is expected to happen around the second quarter of 2024.