Chile on the road to recovery
Chile in focus, Peru on the up, Banktech's iGaming move, Brazil fights match-fixing, +More
Welcome to the latest edition of LosIngresos+Mas. In this edition:
Chile special:
The industry is recovering: lottery sales and visits to casinos are growing.
New regulations for online betting could be ready this year.
That would change the rules of taxation of the game.
Meanwhile, elsewhere across the region:
In Peru, the industry has still not recovered from the pandemic; and regulation for online gaming platforms could be ready in July.
Brazil’s Central Bank approves the entry of fintech Banktech into the world of iGaming.
Conmebol joins forces with the Brazilian Football Confederation to combat match-fixing.
Kiron Interactive appoints a new director for the region.
Chile special
Chilean lottery
Chilean lottery sales grew 17% in 2022, reaching $191m.
Boom time: Chilean lottery sales are booming, according to the state lottery operator Polla Chilena de Beneficencia. The organisation said that in 2022 sales grew 17% compared to 2021, reaching CLP151.9bn (~$191m). However, this was still below the 2019 pre-pandemic figure of CLP170.8bn (~$215m).
Chile lottery sales continue their recovery
The prizes paid by Polla Chilena in 2022 increased by 16% to CLP64.7bn (~$81m), giving the lottery gross earnings of CLP87.2bn (~$110m), with a margin of 57%.
La Polla Chilena operates eight games, but the two most important are Loto and Xperto, which accounted for 80% and 11%, respectively.
Casino recovery
Visits to casinos return to pre-pandemic levels.
The Superintendency of Gaming Casinos of Chile (SCJ) reported that an influx to the country’s 25 casinos in Q123 saw the sector recover to pre-pandemic levels. In January alone, casinos welcomed almost 700,000 people, who spent an average of $85 each. Although the intake is 33% lower than in January 2022, the number of visitors was 35% higher.
Bears repeating: In February, the pattern was repeated, with casinos receiving 42% more visitors than in 2022, but revenue fell by 34% compared to the same month last year. In March, although the number of visitors fell to 618k this number represented a growth of more than 400% compared to March 2022 and the average spending per visitor reached $91.
The SCJ noted that the penetration of online casino applications grew 30% in the last two years, confirming the growth of the industry.
The annual report on the use of mobile apps in Chile, published by the Association of Mobile Application Developers of Chile, revealed that more than 70% of mobile users in Chile have downloaded at least one online casino app on their devices.
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Chilean regulation
Online gaming regulation could be ready this year.
On Wednesday last week, the Treasury undersecretary Heidi Berner presented to the Economy Committee of the Chamber of Deputies the recommendations of the Executive Branch on the bill that will regulate online betting platforms.
As a rule: Berner explained that her recommendations range from preventing money laundering, safeguarding public trust and increasing collection to “effectively restricting the operation of illegal betting platforms that can be accessed from Chile, those that operate without paying taxes and without a responsible gaming policy, [and the] protection of children and adolescents, among other negative externalities.”
Among the main objectives of the regulation are:
Establish an industry-wide Responsible Gaming Policy, with identity verification tools to prevent underage access.
Introduce adjustments to the taxation of platforms and establish general levies to operate, allocating these resources to sport.
Online betting platforms can only operate in Chile under ‘.cl’ addresses.
Establish protocols for the exchange of information between the platforms and the Internal Revenue Service and the Superintendency of Casinos.
Improve – and expand – the catalog of industry offenses.
Prohibit bets with no balance in favor.
Keep the reception of license applications open throughout the year.
Establish requirements like those required of gambling casinos for operating companies to obtain a license, such as:
Be private limited companies incorporated in Chile, the exclusive pupose of which is the operation and exploitation of online betting platforms and related services.
To be constituted and operate with a maximum of 10 shareholders.
Justify the source and sufficiency of funds.
Have a minimum capital of UTM 2,000.
Other technical requirements established by the SCJ.
The Superintendency shall keep records of:
Authorized online-betting platforms.
Betting platforms operating in Chile without authorization.
Authorized items.
Certification authorities.
A list of authorized ancillary services.
Finally, the Superintendency of Gaming Casinos will be renamed the Superintendency of Casinos, Betting and Gambling.
Survey
Our survey says: According to a survey conducted by the Responsible Gaming Corporation and the Chilean Gaming Casinos Association, 73% of Chileans believe that online gambling should be regulated.
The same survey found that:
36% of players are between 26 and 40 years old and 35% are aged 41-65.
24% have only a basic education and 46% a secondary education.
Players who wager online do so more often than those who wager physically or in person.
46% of online gamblers bet more money than they could afford to lose.
62% bet sometimes to recover what they lost.
If properly regulated, it is estimated that online gambling would provide Chilean coffers up to $50m in taxes each year.
Chilean tax
A new tax treatment for gambling.
Single file: Mindful of differences across the industry, the aim is to establish a single taxation system for gambling in Chile. This means that, along with income tax and sales and services tax, traders will pay operating taxes, in addition to a specific tax of 20% on gross revenues.
According to the proposals presented by the Chilean Ministry of Finance to Congress to modernize the gaming law, the government could increase collection: it is expected that when the rule enters into force, it will collect about CLP89bn (~$112m) versus the CLP47bn (~$59m) it currently collects.
With respect to the tax of 20%, an additional tax of 1% is established, which the operating companies may pay directly or charge it against the disbursements they make to promote responsible gaming.
A tax of 0.07UTM (Monthly Tax Unit that as of July 2023 is equivalent to CLP63,326 or almost $80) is established for account opening (which is equivalent to the tax on access to casinos) and the withholding tax to the player is eliminated.
To facilitate and ensure compliance with the payment of taxes, operators will submit electronic declarations to the Internal Revenue Service and this entity will exchange information with the Superintendency of Casinos.
Peru recovery
The gambling sector has not yet recovered to pre-pandemic levels.
Taxing problem: Tax collection for the gambling industry in Peru could reach just $57m by the end of 2023, versus the $84m collected in 2019, Fernando Calderón, president of Peru’s National Gaming Society (SONAJA), told delegates during the first day of the Peru Gaming Show 2023 (PSG23).
According to the executive, in 2019 the industry directly employed 90,000 people, while in May this year it barely exceeded 60,000.
Calderón explained that the sector’s situation reflects the current economic picture in Peru: inflation has increased and employment has not recovered, which means people have fewer resources to spend on entertainment.
In a recent public appearance, the president of the Peruvian Central Reserve Bank, Julio Velarde, estimated that inflation could drop to 3% by the end of this year and that this trend would continue in the first quarter of 2024. Inflation peaked at 8% in April, compared to the same month in 2022.
Regulation forthcoming
Regulation of the new online gambling law could be ready in July.
It’s coming: The general director of Casino Games and Slot Machines of Mincetur, Eduardo Sevilla, believes that the provisions of Law 3595, which regulates the online sector, could be ready by the end of July.
June 28 is the deadline for the Executive Branch to respond to the Congressional bill.
Once the regulation is approved, the various players in the industry – operators, laboratories, suppliers and payment gateways – will have 120 days to express their queries, doubts or disagreements.
Public and private: Sevilla drew attention to the joint work being done by the public sector and the private sector to reach a consensus on the regulation of the industry. For the official, one of the most important agreements has been “to say ‘no’ to anonymity in the game… we must all be united in this real and effective crusade against money laundering”.
After 120 days, the 41 operators present in Peru with licenses from different jurisdictions will have 30 days to register with the Ministry of Foreign Trade and Tourism (Mincetur), which regulates the sector. He added that new platforms arriving in Peru must request authorization from Mincetur through registration and approval of their operations.
Sevilla said the authority seeks “total symmetry” between face-to-face gaming operators and digital platforms, taxing both with the 12% excise tax.
Finally, he explained that, in terms of online gambling regulation, Peru will follow the model of Colombia and Argentina and “in this 120-day process, each technological platform will go according to its own time, to its own equipment, and will work on its adequacy.”
Banktech Brazil
Banktech has entered the iGaming space in Brazil offering efficient and secure payment methods.
Start me up: Banktech is a fintech company authorized by the Central Bank of Brazil and founded just two years ago with the purpose of offering safe, reliable, fast and efficient payment solutions and methods for the gambling and sports betting industry.
According to Julio Cesar Vieira, CEO of Banktech, it differentiates itself from the competition because it uses innovative technology that allows it to perform millions of transactions quickly and securely.
It offers clients tailormade payment systems and works with various financial institutions, ensuring that its clients can expand their operations and be able to receive and send money in large volumes at the lowest rates on the market.
“In this way, even our competitors become our partners indirectly,” said Vieira.
Banktech has only been in existence for two years, but its parent company, GMB, has been operating in the international Forex market and treasury in Brazil for more than 10 years.
According to the CEO, as part of its business, GMB realized the enormous growth potential that the industry has in Brazil due to the demand of its customers, who need fast, reliable and cost-competitive solutions.
Regarding the unclear picture facing the gaming industry in Brazil, Vieira said Banktech is convinced that this is precisely the key moment to enter that market.
“We are growing month by month at a dizzying pace,” he concluded.
Fifagate
Conmebol will deliver Fifagate funds to the Brazilian Football Confederation to combat match-fixing.
Max pressure: Having paid a fine for advertising gambling by unauthorized betting houses in Uruguay during the Copa Sudamericana and Copa Libertadores in 2022 and in the midst of the scandal that gave rise to Operation Maximum II, the South American Football Confederation (Conmebol) has decided to join the Brazilian Football Confederation (CBF) to combat the fixing of matches in series A and B of the professional football championship of that country.
To this end, the South American soccer authority has announced that it will use part of the resources recovered in the Fifagate case, which, according to Conmebol itself, amounts to about $100m.
It is still unknown what percentage or number of resources will be delivered to the CBF to achieve the described purpose.
The objective is to implement initiatives to combat match-fixing and irregular betting.
Fifagate and Operation Maximum II are just two of the cases that became known, but it is feared that there are more similar cases, albeit smaller and more limited.
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Career paths
Kiron Interactive appoints Leticia Palacios as director of sales for Latin America.
Kiron Interactive has appointed the Mexican Leticia Palacios as its sales director for Latin America as it continues its expansion in the region.
The executive has extensive experience with industry products in its face-to-face and online modalities and has worked with Codere, Microgaming and Caliente.
Kiron co-CEO Steven Spartinos said Palacios brings a wealth of retail and online experience, as well as her deep knowledge of the region and an “unmatched” network of contacts.
“Her presence gives our talented team a significant boost and I look forward to collaborating with her to explore how Kiron’s award-winning products and services can help operators gain a competitive advantage throughout Latin America,” said Spartinos.
“It’s always a fantastic boost to have a strong brand and portfolio behind you and, while Kiron is already established in the areas I will be focusing on, there is always growth to be achieved and I can't wait to get started.”
Publishing schedule
This is the English translation of the LosIngresos+Mas newsletter published yesterday.
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