A sports betting monopoly imposed in Paraguay a month ago is causing a lot of uncertainty and derision in the region.
Background of Paraguayan gambling
Paraguay is located right in the heart of South America, bordering Bolivia, Brazil, and Argentina. As a result of a significant increase in the level of manufacturing and overall industry in the country, economic growth has been steadily increasing in recent decades, leading to people having higher disposable income. Over 30% of the working population work in the mineral industry.
With the growing levels of disposable income, the popularity of gambling has steadily increased. Most types of betting are legal in the country – even blood sports like cockfighting are allowed. Casinos were legalized in 1943, but only a few remain in operation. Many sportsbooks and bingo halls can be found throughout the country in addition to the national lottery, which is operated by the state.
Traditionally, online gambling has not been addressed through the gambling laws in the country. People generally are able to participate in their preferred type of online gambling without facing any consequences if the site they are dealing with is based outside of the country. Anyone inside Paraguay attempting to run their own form of online betting platform will be heavily punished as the state believes it is a mechanism for money laundering.
What about the recent turmoil?
In March 2018, Daruma Sam S.A. was awarded a monopoly license on sports betting in the country. This five-year deal was given to the company by the National Commission of Games of Chance in the country and will allow Daruma Sam to operate its sports betting offering through its Apostala brand.
This officially came into operation in June, and there has been turmoil in the sector ever since. The nine other sportsbooks that had been in operation are now deemed to be illegal, and action is currently being taken by the authorities to have them halt their operations. The only alternative they have is to enter into some type of cooperative agreement with the Daruma Sam Company.
The monopoly allows Daruma Sam to offer betting both online and through 200 of its retail outlets. The tax levied on the company will be worth 21% of their gross revenue – about $640,000 (£482,000) monthly to the state.
Most of the other sports betting operators have kept their operations open. Two of them, Aspotamina and Crown, had their premises visited by the national police and agents of the public prosecutor at the start of July. This visit was requested by the folks at the National Commission.
Both of these companies are continuing their operations as they await a decision by the courts over the legal challenge they have brought against the Commission related to the constitutionality of the decision to offer a monopoly license.
They can legally continue to operate thanks to a judicial order. The lawyer for Montego SA (the parent company of Crown) alleged that these raids were part of a plan aimed at discrediting the new monopoly’s rivals by showing the public that the operations of these betting companies could be illegal.
During the raids, betting equipment was confiscated and the lead attorney for Enfield (the parent company of Aspotamina) outlined how its payment processing contract had all of a sudden been curtailed by the provider.
The controversy around the awarding of this monopoly license looks set to rumble on for some time. There have already been allegations made by certain parties related to political interference, allegations which led to the resignation of the former chief of the Commission in advance of the agreement of this monopoly license.
There is political uncertainty in the country, with the general election taking place in April, and the new leadership coming into power in August. The new leadership group had already tried to extend the current licenses of two of the country’s casinos for another ten years, even though they are already valid until 2025. This move was inevitably scrapped.
The whole process of deciding to award a monopoly license clearly has not been a popular one in the state, and it looks like the courts will ultimately decide whether or nor the situation is allowed to continue.