Chile’s Chamber of Deputies has given the green light to the government’s gambling regulation bill, making no amendments to the draft approved in committee.

The news marks the latest episode in the country’s tumultuous journey to regulate online gambling, a process that looked like it might collapse in September after the Supreme Court ordered all gambling sites to be blocked.

The legislation sets out the regulations for a new online gambling licensing regime, designed around a strengthened regulator and a 20% revenue tax.  

Operators will also be required to make additional contributions to responsible gambling projects and Chilean sports, worth 1% and 2% of gross revenue respectively.

The proposed law also criminalises black market operations, establishes responsible gaming protections and regulates advertising and promotions.

The beefed-up regulator will be renamed the Superintendency of Casinos, Betting and Games of Chance and will be responsible for most licensing and regulatory activity.

The Internal Revenue Service will also be granted new inspection powers, with an expanded mandate including the new online gambling market.

Licencees will be required to pay a 1000 UTM ($73,100) per year fee to operate.

The country’s responsible gambling strategy will be drawn up by the Ministry of Finance following reports from the gambling regulator and Ministry of Health.

Under the text of the bill, Chilean financial bodies, including the Financial Analysis Unit, the Financial Market Commission and the undersecretary of telecommunications, will collaborate to combat money laundering efforts.

Critics of the bill argued that bringing online gambling directly to the homes of Chile’s citizens would mean a rise in problem gambling.

Long road to regulation

The Ministry of Finance first floated regulating the gambling market in 2021 under the previous centre-right Sebastián Piñera government.

However, the project survived the 2022 presidential elections and the subsequent establishment of the left-wing Gabriel Boric administration.

A bill was eventually tabled in March 2022 that sought to create a regulated online gambling market.

After a stop-start journey, the Chamber of Deputies’ Economic Commission approved the bill in June, confirming the soundness of its tax framework.

However, the entire regulation process was thrown into doubt in September when the Supreme Court voted unanimously to block all online gambling websites in the country.  

The proposed law will now be sent to the senate, where reports have indicated heavy lobbying has been underway to reduce the bill’s tax rate.

The featured image is of Miguel Mellado, a sponsor of the bill.

Chile’s newly elected government has introduced a project to legalise online gambling in the country in an effort to generate additional tax revenue.

At present, all gambling is illegal in Chile unless expressly authorised by law – a position which is currently afforded to the country’s two regulated lottery operators, as well as racetracks across the region and its 21 land-based casinos.

However, it is estimated that some 900 gambling websites already offer online gambling in the jurisdiction, and their presence in Chile is well known due to a series of high-profile football sponsorships from firms including Betsson, Betway and Betano.

When announcing its sponsorship of Chilean club Colo Colo earlier this year, Betsson described the deal as “another major milestone in Betsson’s expansion plan in South America.”

Chile first introduced an initiative to regulate online gaming last year, but the project is only now beginning to see the light of day.

Online gambling is estimated to be worth around $150m annually in Chile, and the government intends to use that revenue to collect taxes worth some $55m, according to Treasury undersecretary Alejandro Weber.

The law seeks to make renewable online gambling licences available for a period of five years, with temporary, non-renewable licences lasting six months also available.

Licences will allow for the operation of any betting or gaming product with the exception of lotteries, which are currently operated under a monopoly model by the state-owned Polla Chilena and privately-owned Loteria de Concepcion.

Licensees must be incorporated in Chile and report the origin of funds used to operate their business, details on shareholders and financial beneficiaries and report any suspicious activity.

The market will be overseen by the Superintendencia de Casinos de Juego (SCJ), which will be renamed the Superintendencia de Casinos, Apuestas y Juegos de Azar (Superintendence of Casinos, Betting and Games of Chance).

In addition to a tax rate set at 20% of operator gross income, licensees will also be required to contribute 1,000 UTMs (Monthly Tax Units) per year. This changeable tax unit is determined by law and updated monthly according to the consumer price index. Temporary licensees will be charged 100 UTMs.

Operators offering sports betting will also be required to deliver a further 2% of annual gross income to national sports federations, while all operators will be required to spend at least 1% of annual gross income on “actions aimed at promoting the development of responsible gaming.”

Finally, all customer winnings will be subject to a 15% tax, which will be claimed when money is withdrawn from gaming accounts.