CARLOS SILVA, DREAMS: A REVIEW OF THE IGAMING REGULATORY LANDSCAPE IN CHILE

THE CASINO OPERATOR DREAMS has built a solid business throughout Chile to become one of the leading companies in the industry. Now, it’s going after a merger with its main competitor, Enjoy, which would result in the creation of a Latin American mega-operator, with 58% of the land-based market

BY LUCIA GANDO

After renewing four of its licences in Chile, Dreams now has seven licences in the country, on top of its eight in Peru, two in Colombia, one in Panama and one in Argentina. As you can see, the casino operator has established itself as a leader in the region.

As of late, the company has been closely monitoring developments from the local regulator, while the Superintendence of Gambling Casinos (SCJ) awaits the resolution of Congress around the igaming and sports betting regulations.

As international companies look to expand their footprint into the Chilean market, Dreams is actively participating in the national debate to create a regulatory framework that incorporates the development of new technologies, making sure that the interests of the already established players are taken care of.

The Economic Commission of the

Chamber of Deputies has welcomed experts, such as the operators and the regulator, in different hearings to discuss different viewpoints from various stakeholders.

At the same time, the Commission delayed the discussion to sometime during the first semester of the year.

Although it has been revealed that the project which will be discussed is the one unveiled by the former Undersecretary of Finance Alejandro Weber, which predicts that gaming companies will generate $55m in annual tax revenues.

To share the current and expected legal provisions in Chile, the Attorney and Corporate Affairs Manager of Dreams Carlos Silva analysed the challenges of the bill and the demands from the licensed operators that are already established in the country.

The Chilean Presidency presented to Congress a bill that regulates the development and operation of betting platforms and online casino games. This project is very promising, since it addresses the need to update the legal framework for gambling in Chile.

Currently, the Chilean Constitution states that the betting regulation must be approved by law. Within this framework, the general rule is the ban on gambling and games of chance. Consequently, the commercial exploitation and public offer are considered crimes. Exceptions to this rule can only be made expressly in a law that establishes a special authorisation that regulates the operation.

The local Criminal Code penalises anyone who exploits gambling with prison sentences, and it doesn't differentiate between land-based or virtual operations.

On the other hand, the Civil Code establishes that betting debts are illegal, so collecting money from bets is prohibited.

However, special laws allowed three exceptions to this rule: the lottery game developed by two public entities, the horse betting offered by the racetracks of Chile and the land-based casinos operated by companies licensed by the SCJ. These casino licences are obtained after a public bidding process where they need to meet several requirements, such as justifying the origin of the funds that finance the casinos.

According to the bill, the State could collect close to $55m from taxes from operators of online betting and virtual casino games, which could equate to approximately 20% of their gross income. The licensees would also have to pay $78k a year for a general licence and $8k for a temporary one.

However, if online platforms also offer sports betting services, they have to contribute 2% of their annual gross income to the National Sports Federation of each sport. In addition, the operators would need to monitor problem gambling activity and create a “National Policy for Responsible Online Gambling”.

To get the regulation up and running, online gaming companies must spend at least 1% of their annual gross income on actions to promote responsible gambling.

Furthermore, players would have to pay 15% of their income from gambling when withdrawing money from their personal accounts. The regulation also indicates that the companies must be established in Chile and report the origin of the funds to operate their business, share information about their shareholders and final beneficiaries, in addition to reporting suspicious money laundering operations. Finally, the SCJ would be in charge of authorising and supervising the market.

However, it doesn’t solve the urgency of generating income for the Chilean Treasury, since the gaming platforms - which currently operate illegally in Chile - are not penalised and continue to contribute nothing in the country while the law is being discussed.

Moreover, Chile rewards companies who are committing crimes today - such as virtual casinos and online betting platforms - enabling them to participate in the process, making it easier for them to unfairly compete with the new operators.

Considering that competition in the online gambling market revolves around databases, it’s obvious that, during the years where they illegally operated, the platforms collected information from the players - identity, addresses, consumption habits, etccreating these databases, which are essentially to compete.

The bill, however, doesn’t solve the situation and would allow the current platforms operating in Chile to participate in a future regulated market from a privileged position, leaving new entrants - who have complied with the law - at a disadvantage.

It would be interesting if the law incorporated solutions that have already been tested in other jurisdictions, such as establishing a cooling off period, to prevent anticompetitive advantages. Finally, in relation to the databases that the online gaming platforms have already set up, it doesn’t address a sanction for obtaining the data without authorisation, while the protection of personal records and essential information remains unresolved.

We hope that the regulation change that is being processed in Congress is done in accordance with the public policies that have supported the gaming industry in Chile, such as the development of responsible entertainment, the promotion of the local economy and the development of the territories, with consumers as a priority and protecting personal data, free competition and preventing money laundering. •