Exclusive: ‘Peru is already a mature and attractive market,’ says AMG’s Solorzano
Interview with director of Peru Gaming Show, Lula’s criticism +More
Rubén Solorzano, general manager at AMG and director of PGS 2024, talks exclusively to I+M about Peru’s betting market.
In +Más: Ollamani’s Mexico Stock Exchange debut, Colombian lottery.
Brazil: President Lula turns on OSB just one month after signing it into law.
Somethin' magic in your eyes, yeah.
Peru’s great expectations
Rubén Solorzano, general manager of Affiliated Marketing Group (AMG) and director of the Peru Gaming Show (PGS 2024) speaks exclusively to LosIngresos+Más.
What are the expectations of the gaming and sports-betting industry now that Peru has a complete regulatory framework?
In Peru, the existence of casinos and slot machines was regulated more than two decades ago (Editor's note: Law 27153, July 8, 1999). With the law approved in June 2022 and regulated last year, Peru already has a complete legal framework governing physical and remote gaming, meaning casinos, online games and sports betting. In this sense, the industry will continue to grow and develop steadily because there are clear rules and guarantees for investment, as well as protection and guarantees for players. Everyone wins.
Is there room in the Peruvian market for the industry to continue growing? Is there space for new players to enter?
If you meet the requirements set by the legislation, anyone can enter and compete. Yes, there is space. There are established global brands with a lot of recognition and experience, and the Peruvian market is very attractive precisely because the rules are already established. If Coca-Cola enters a new market, it will have a share, and it will depend on its strategies for loyalty and consumer attraction to gain market share, and, of course, on the response capacity of the established players. This benefits the market and the players. There are no barriers to entry.
Since the pandemic, there is more betting through online platforms than in physical casinos and slot machines. Why?
The state abandoned the [physical] industry. It kept it closed for two years when the rest of the economy had already reopened. During that time, people looking for entertainment in betting started doing it online, and the sector grew exponentially. Apuesta Total, for example, is a resounding success story and is now the largest in that sector.
What is the market share of physical and online gaming, and what was it before the pandemic?
Until 2019, with regulated casino and slot machine games, that line of business was revitalized and achieved an estimated 75% participation, with the remaining 25% corresponding to online games. Then, post-pandemic, online or remote games experienced – as I mentioned – almost exponential growth, to the point that, at the moment, their participation in the critical mass of gaming in Peru represents 65%. In the coming years, this trend should continue.
Is there informal or illegal gambling in Peru?
Yes, there is, but it is not significant. It is risky, expensive and does not offer guarantees. People seek security for their bets, they look for well-known names and brands. They seek guarantees. We are talking about risking losing money, not only in the case of losing a bet but even if you win one.
It’s not like buying branded clothing that only has the label…
Exactly. People seek entertainment, but with security and comfort. If you don't feel safe, you're not comfortable.
Is there competition between countries? That is, when Brazil definitively opens up, when Uruguay, Paraguay and Chile have their regulatory frameworks defined will that affect the flow of investment towards Peru in the gaming industry?
Companies, whatever activity they carry out, seek to generate added value. The conditions that different markets offer to ensure investments will be decisive in attracting new proposals, so competition between markets is inevitable. That is why it is important to have clear laws, rules and regulations that provide legal certainty for operations. Peru has a mature and absolutely regulated market for all verticals of the gaming industry and this opens up many possibilities for the entry of new companies interested in investing here. Platforms have a general and unique character for the company that develops them and can be offered to any operator who requests them without border restrictions.
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Solorzano interview continued…
How much does the industry bill in Peru, and what is the breakdown between physical and virtual gaming?
According to the Ministry of Foreign Trade and Tourism (Mincetur) report for the year 2022, in the last 16 years the Peruvian state has collected more than PEN3bn (about $790m at the current exchange rate) through casino and slot machine games. The results in upcoming years will be much higher with the implementation of the law for online gaming and sports betting this year.
How much did the state collect from the industry last year?
In 2023, the Peruvian state collected PEN210m ($55.3m) from taxes on casinos and slot machines (12%). It is estimated that, for this year, with the enactment of the law for online gaming and sports betting, the state would collect an additional PEN162m per year ($42.6m).
In Colombia, what the state collects from the gaming and sports-betting industry goes to the health sector. In Brazil and Argentina, it goes to health and sports. Where does it go in Peru?
According to the approved norm in Peru, the distribution of what the government collects is distributed as follows: 40% for Mincetur (75% for tourism and 25% for supervision), 20% for the Peruvian Sports Institute, 20% for the Ministry of Health and 20% for the Public Treasury.
How much will industry revenue grow in 2024? Will those growth rates be sustained?
Definitely. The growth rate of the gaming sector, measured by income level, will maintain the upward trend, even more so now that the vertical of online gaming and sports betting has complete laws and regulations. Many gaming platform providers are trying to register to operate in the Peruvian market, classified as a potential market.
In some markets, such as Argentina and Colombia, revenues from physical casinos are increasing, but the amount of individual bets is decreasing. More people are going to casinos, but they are betting less and less. Why is that? Is that happening in Peru?
What may be happening in other markets is that the player is optimizing their participation in entertainment between physical games and online games. It may also happen that there is a generational reordering of players: before, those who attended casinos the most were people over 40 with higher purchasing power; today, younger people attend out of curiosity and have little permanence in gaming rooms. And, yes, this phenomenon could be occurring in the Peruvian market as well.
How will the industry grow in Peru? Will the difference between online games and betting and physical gaming increase, or will they go hand in hand?
The growth of the gaming industry in Peru will definitely be explained by the advancement and development of online games and sports betting; the conditions are given for this to happen. Surely, physical games will be displaced over time by virtual games; it is a reality that cannot be ignored.
Which regions of Peru have the greatest potential for industry growth?
The south and north of Peru are the areas with the most activity, cities such as Tacna and Arequipa on one side, and Piura and Trujillo on the other.
Now that the legislation is complete, what does the industry need to continue developing in Peru?
For further development of the industry in Peru, what is needed is government intervention to achieve political and social stability, as well as greater citizen security.
+Más
Mexico: Ollamani, owner of the América football team and Grupo Televisa’s betting business, debuted on the Mexican Stock Exchange last Tuesday (Feb. 20), opening trading at 11.5 pesos ($0.67). The shares reached 34.5 pesos halfway through the day before closing at 29.53 pesos.
The share price retreated during the week and closed on Monday (Feb. 26) at 27.2 pesos; it is expected to stabilize between 23 and 25 pesos.
Monday’s closing price values the company at 3.25bn pesos ($190m).
Colombia: During 2023, Lotería del Tolima transferred $1.64m to the health sector from its sales of traditional lottery games
Meanwhile, the National Council of Games of Luck and Chance (CNJSA) has reported it can authroize a further 12 chance draws in Colombia, in addition to the 15 lottery draws for 2024.
Brazil: The Secretariat of Prizes and Bets has taken its first steps towards a fully realized regulated space by publishing an ordinance outlining the requirements and procedures for certifying entities in the sector.
The ordinance covers the recognition of operational capacity for certifying betting systems, live gaming studios and online games used by fixed-odd betting lottery operators.
Pay day: As the Brazilian betting market continues to expand, it “offers an opportunity” for payment providers such as OKTO, said the company’s Brazil country manager, Leonardo Chaves. “The industry is poised for substantial transaction volume growth," he added.
Argentina: The Buenos Aires Provincial Institute of Lotteries and Casinos has signed a cooperation agreement with the Ombudsman’s Office to deepen strategies for the prevention and early warning of gambling addiction in young people, as well as to promote responsible gambling.
Lula’s criticism
President Luiz Inácio Lula da Silva has criticized sports betting and online gambling, saying they are “worse than jogo do bicho [an illegal gambling game]” because they are advertised 24 hours a day through television and program sponsorship.
Lula’s comments come less than a month after he signed the law regulating online sports betting and his government vigorously promoted its approval by Congress.
The president also criticized companies that do not pay taxes, although that is expected to change in the coming months with the start of the licensing process.
Last week, Lula reported that the president of Banco do Brasil, Tarciana Medeiros, told him Brazilian families spend 14% of what they earn on electronic games.
Calendar
Mar 4: Gaming Insights Rio
Mar 5-7: SBC Summit Rio
Publishing schedule
This is the English version of the LosIngresos+Mas newsletter published yesterday (28 February).
An +More Media publication.
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