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A high-stakes lobbying battle has resumed as Chile’s online gambling bill begins its shuffle through the Senate, after taking more than a year to pass through the Chamber of Deputies.
Chile's Casino Gaming Superintendence (SCJ), the Polla Chilena de Beneficencia public lottery and representatives from unregulated online operators gathered again last week to present their arguments before the Senate's economy committee, which is the first stop for the bill in the upper chamber of the National Congress.
As has been the case for the past year and a half, the SCJ and offshore online platforms, which are represented by Santiago-based lawyer Carlos Baeza, have fundamentally different interpretations of current Chilean law as it applies to offshore operations.
The online platforms insist that they are not illegal, while the SCJ insists that they are.
According to the presentation given to senators by the SCJ: “Without express legal regulation, the commercial exploitation of games of chance in Chile is illegal, and also constitutes a crime.”
Regulators cited Article 63 of the Chilean Constitution, as well as Article 1466 of the Civil Code, to support their case.
Baeza, on the other hand, said that the Senate committee hearing was an opportunity for offshore operators “to take charge of making a series of clarifications in relation to these allegations of illegality which are absolutely unfounded”.
In a presentation, leading online operators wrote that provisions of Chile's Penal Code and the 2005 Casino Law No. 19.995 prohibit online gambling, “solely and exclusively by companies that obtain a licence for the operation of casinos under the same law”.
The SCJ also took up the cause of Polla Chilena during its presentation to senators, noting that offshore betting companies paid at least US$8m during 2023 to sponsor various football teams and competitions in Chile.
“Due to its regulation, Polla Chilena de Beneficencia cannot make a competitive offer,” the SCJ said of Polla Chilena's Xperto sports-betting product.
Definitions of legality have long been a matter of contention in the debate of online gambling in Chile, which will come to a head in the Senate as senators come to a consensus on a final draft of the bill that was approved by the lower house in December.
Online operators hope that a final version of the legislation will eliminate the currently planned 12-month cooling-off period and mandatory retroactive taxes for any offshore operators that want to obtain a Chilean licence.
Operators have also argued time and again that the proposed effective tax rate, which currently sits at 38 percent based on a combination of a gaming tax and VAT, is prohibitive for effective channelling of the offshore market into the regulated space.
Baeza called the planned tax rate both “absurd” and “counterproductive”.
“The phenomenon of channelling makes this a very relevant issue, because the higher the tax burden, the lower the channelling, and that means that many operations will remain outside the control of the government and therefore will not pay taxes.”
