Nearly three years after the official announcement of planned regulation, Chile has finally taken significant strides toward launching a regulated online gambling market. An online gambling bill has received a formal okay in the Chamber of Deputies and is now bound for the Senate for the next approval stage.
Chile’s tumultuous path to online wagering regulation is finally headed in the right direction. This is after a bill regulating online gambling and betting platforms received overwhelming support in the country’s Chamber of Deputies and forwarded it to the Senate. The bill passed the South American country’s lower house on a 97-28 vote and will now be subject to further deliberation in the country’s Senate.
While the latest efforts mark significant progress in online gambling regulation, the country still faces significant hurdles that must be resolved before successfully launching a regulated online gambling market. After passing the pro-online gambling measure, the Chilean Chamber of Deputies released a statement that read in part:
The regulation aims to generate a competitive online gambling market… It aims at making transparent the origins and destination of the resources obtained through these platforms. The law will establish the conditions and requirements for the authorization, operation, administration, and control of the platforms that allow online gambling.
Upon landing in the Chamber of Deputies, the online gambling regulation bill was subjected to a fierce debate. Here, the reports of the Economy, Sports, and Finance committees were presented to the house by the presidents of each committee, namely Miguel Mellado, Jorge Guzman, and Jaime Naranjo.
The debate unfolded with the different deputies in the house presenting their divergent points of view. At the end of the discussion, the text received backing in two votes. The general provisions were approved by 80 votes in favor, 36 against, and 18 abstentions. On the other hand, the special quorum rules got 97 votes in favor, 28 against, and 9 abstentions.
Bill 035/2022, introduced to regulate online gambling in Chile, set out to address three key areas. The first was to identify a specific regulator that would oversee online gambling in Chile. The second would be to introduce a license to allow online gambling regulators to operate in the country. Finally, the third was establishing a special taxation rate that would apply to all the gambling regulators plying their trade in the country.
On the taxation matter, the bill’s current version proposes a special and substitute tax of 20% that applies to the gross revenue of an online wagering platform. In addition to this tax, other specific taxes are provided for in this bill. This includes a 2% levy imposed on sports wagers, which would go to the national federation of the sport on which the bet is placed. Additionally, the bill calls for 1% of the gross revenue of an online gambling company operating in Chile to be channeled toward responsible gambling causes. Users will also be subjected to a substitute tax of 15% on gambling income, a levy in place of the income tax that these users should be paying.
Meanwhile, according to the bill, gambling companies registered under Chilean jurisdiction can obtain a general license covering all their gambling operations in the country for up to 5 years. It is worth noting that this section was included in the bill to protect licensed operators from grey market activities.
There are also stern provisions highlighting the course of prosecution of criminal activity related to online gambling in the country. For instance, article 15 of the bill lists penalties of minor imprisonment and a fine of 15 to 20 monthly tax units for altering a wagering event to get a favorable outcome. The bill also touches on punishments for those who use someone else’s account to wager and those who give their accounts away to third parties. For this crime, the bill proposes a minimum term of imprisonment along with a fine of 6 to 20 monthly tax units.
Article 28 of the bill also grants additional authority to the Superintendence of Casinos, Betting, and Gaming. So, on top of authorizing or denying licenses for betting, drawings, lottery numbers, and thoroughbred horse racing races held in Chile or abroad, they have received new powers. Additionally, on the matter of licensing, the bill seeks to emphasize adherence to requirements to prevent crimes such as money laundering and to prevent the exposure of children to online gambling. Further, the new law will require online casino operators to disclose their financial beneficiaries. Through the requirement, legislators sought to enhance the transparency of funds’ origins and destinations in a bid to prevent a lot of conflicts of interest.
Chile’s arduous journey to gambling regulation commenced in February 2021 when its Finance Ministry announced that it would ramp up efforts to legalize online gambling in the country. The Chilean government made true its promise a little over a year later when it published its first online gambling bill, which is the bill that the Chamber of Deputies has just sent to the floor of the Senate. Following the bill’s introduction, the Chambers of Deputies’ Economic Commission approved the bill, agreeing with the soundness of its tax framework.
Initially, the process for online gambling regulation in the country was thrown into doubt following the Supreme Court’s decision to order the restriction of access to 23 online sports betting websites in the country. Thankfully, this obstacle was overcome, and following the Chamber of Deputies’ approval, the online gambling regulation measure will be tabled in the Senate. All eyes are now on the South American nation’s Senate, hoping it will get the rubberstamp that the industry highly anticipates.
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