Chile Considers Betting Platform Regulation Bill
A bill for the regulation of betting platforms is now being considered by Chile’s Chamber of Deputies after being sent by the Finance Commission. The bill was supported in the Finance Commission, aside from an element which proposed a high tax rate of 38%, which would make Chile’s betting tax far higher than it is in other South American countries. The rate was mostly not supported by companies working in the industry, which of course would have to foot this particular tax bill if approved.
Brazil’s CAE has approved the latest version of the sports regulation bill.
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High tax in the way of sports platform support
Online Betting Platforms, known as PAL, could soon become a regulated reality in Chile. The country is working on a text to approve regulation. This bill has already been considered by parts of its legislature, including its Finance Commission.
Companies working in the sports betting industry have also chimed in, most notably to share their discontent with the proposed tax rate of 38%. The high tax is an interesting sticking point given what is going on in other Latin American countries. In Brazil for example, a lower tax rate was lowered further after concerns that this rate would drive users towards more readily available, illegally operating sites.
On one hand, Heidi Berner, Undersecretary of the Treasury, voiced her support for the proposed tax rate. Berner shared that the law is ultimately on the government’s side with this, since currently platforms operate illegally; they should not, therefore, be given much leeway in the decision-making process.
However, Carlos Baeza, a lawyer who advises the key betting houses operating in Chile, said that the tax burden is too high. It would surpass the Netherlands which has a rate of 29% and many other European countries. The cost could be fewer legally operating platforms in Chile, less choice for consumers, and more incentive for bettors to look to other means of gambling.
Regardless, if approved, the bill would create a competitive market for sports betting in Chile. It aims to create a transparent system that operates fully within the confines of the law, whereby the money spent by bettors and processed by platforms can be tracked and taxed sufficiently. Money-laundering is a major concern not only in Chile but across the Americas and the world.
The bill would give regulatory oversight power to the Superintendency of Casinos and Games. The Superintendency would be responsible for putting the approved framework into action and for enforcing laws, including whatever stipulations are made for companies interested in getting in on the action.
At the moment, it is estimated that the bill could result in tax earnings for the government equivalent to $96 million USD per year. This will be divided up between various projects. A percentage will be shared with the National Sports Institute, for example, in order to buoy the efforts of smaller teams and leagues as well as the Olympic and Paralympic committees.
A percentage will also be allocated to the promotion of responsible gaming, which is more or less a must in all new betting bills coming onto the scene at the moment, particularly throughout Latin America and Spain.
Another controversial element of the bill — one that Baeza also cautioned against — is the so-called “cooling off period”. This is the idea that sports betting platforms would not be allowed to operate immediately; in fact they must take a break in operations if they are already active in Chile.
This is meant to give casinos and other land-based forms of gambling an advantage, since it is feared that online gaming will take away business from these long-standing institutions. Baeza has the same critique for this, suggesting that it will reduce the free market and de-incentivize the participation of sports betting houses in Chile’s regulated system.
