Implications of legislation for existing online gambling operators in Chile

The Supreme Court’s decision to uphold a legal challenge from existing monopoly operators has significantly impacted the online gambling sector in Chile. This decision demands that authorities treat online gambling as an illegal activity until new legislation is passed, effectively blocking access to gambling sites. This has created a protective barrier for the current monopolies, while simultaneously posing a hurdle for potential new entrants in the market. The future of online gambling in Chile now hinges on the

successful passage and implementation of the new legislation.

Consquences for current online betting businesses

For existing operators like Loteria Concepción, Polla Chilena, and Teletrak Chile, the decision to treat online gambling as an illegal activity until new legislation is passed effectively protects their current monopolies. It blocks access to foreign online gambling sites, thereby reducing competition. However, the proposed legislation aims to end these monopolies, which is why these companies are seeking protections for their businesses.

For new entrants to the market, the Supreme Court’s decision presents a barrier. The court has ordered that the new legislation include a 12-month cooling-off period for operators that have operated in the grey market. This means that these operators would have to cease operations for a year before they can apply for a license under the new law. This could deter potential new entrants who might find this cooling-off period financially unviable.

Furthermore, overseas operators such as Betano and Betsson argue that online betting is not explicitly prohibited under Chilean law. However, the regulator, the SCJ, maintains that without explicit legal regulation, the offer is illegal. This creates a legal grey area that could potentially discourage new entrants.

In conclusion, the Supreme Court’s decision and the pending legislation create a complex landscape for both existing operators and potential new entrants in the Chilean online gambling market. The final outcome will depend on how the new legislation is framed and implemented.

Background

Chile’s path to legalizing online gambling has been intricate and fraught with difficulties. A bill proposed last year to legalize online gambling did not progress, leaving the country’s gambling laws in need of revision. The Senate and Congress have since recommenced efforts to update Chile’s gambling laws, focusing on finalizing Ley N°035/2022. This law, introduced in March 2022, proposes measures to regulate online gambling.

Lawmakers had previously agreed on a licensing structure, the interpretation of online gambling, and a proposed 20 per cent tax on gross income. However, the bill was delayed in the Senate Economy Committee while awaiting inputs from other departments on technical requirements, penalties, and legal definitions.