Chile Government Set to Propose Online Gambling Legislation to Fuel Pandemic Recovery

  • The legislation would legalize online gambling and modernize land-based casino regulation
  • Chile could see online gambling in Q1, with the Finance Ministry intending to raise tax funds
  • The Ministry's attempt to introduce ad-hoc online gambling legislation failed in 2020
  • After reopening in November, Chile casino revenue was down 57% y-o-y in its first month
Chile’s Ministry of Finance will propose two new bills which would legalize online gambling and modernize the country’s land-based casino regulation. [Image: Shutterstock.com]

Two new bills for modernization

The Chilean government has announced plans to introduce legislation for legal online gambling, while also modernizing Chile’s land-based casino regulation.

a competitive online market with advanced player protections

The nation’s Ministry of Finance said it will propose two bills. The first will set out regulation for online casino games, sports wagering, and other forms of online betting. The government body believes this will create a competitive online market with advanced player protections.

The ministry also announced plans to modernize Chile’s land-based casino market. This second bill will increase the tax rate for the country’s casino operators and extend all licenses into 2022. The legislation also aims to update responsible gambling measures and technical requirements.

In proposing the new bills, the Finance Ministry intends to increase Chile’s tax revenue in response to the COVID-19 pandemic. It will introduce the legislation in Q1 2021.

Ad-hoc measures in 2020

This isn’t the first time Chile’s Ministry of Finance has attempted to introduce a legal online gambling market. Last year, Chile’s 14 casino brands faced the expiration of their operating permits. However, in June 2020, the Ministry of Finance introduced an ad-hoc measure which automatically extended all permits for a further year, according to Chilean media.

Commenting at the time, Chile’s Undersecretary of Finance Francisco Moreno argued for the necessity of automatic license extensions. He said a tender process in “adverse conditions” created by the pandemic could “end up affecting municipal revenues for the next 15 years.”

As part of the measure, the Ministry of Finance also proposed the introduction of remote gambling for brick-and-mortar casinos, intended to fuel their recovery from the coronavirus crisis. The body said the move would facilitate the maintenance of tax contributions to the Chilean state.

Despite the ministry’s backing, the proposal never made it into action at the time. The government failed to reach an agreement over the emergency measure, with others arguing for a more stringent regulatory approach. Chile’s gambling regulator, Superintendencia de Casinos de Juego (SCJ), has consistently pushed for a well-balanced tax and regulatory framework for online gambling.

A long way to recovery

In 2019, Chile’s casino industry generated $670m in gaming revenue and contributed $210m in taxes for the state. The following year, casinos struggled with a long period of COVID-19 closures throughout 2020.

SCJ ordered the shuttering of gambling facilities at the beginning of the pandemic in mid-March, with the closures lasting over eight months. Between November 19 and 28, 11 casino properties reopened their doors, including Enjoy Santiago, Casino de Colchagua, and Sun Monticello.

Chile’s casinos saw gaming revenue drop 44% year-on-year

According to data from the national regulatory body, Chile’s casinos saw gaming revenue drop 44% year-on-year in their first full month since reopening, to a total of $5.9m. This was mainly the result of a steep decline in casino visitor numbers, with visits down 57% from the same period in 2019.

The 11 casinos in operation generated tax revenue of $1.8m for the month. They contributed $715,000 in gross tax and $950,000 via VAT payments. SCJ described the remaining $133,000 as “entrance tax sent to Chile’s general funds.”