Peru Considering Legalized Online Sports Betting and Gambling

Peru Considering Legalized Online Sports Betting and Gambling

The South American nation of Peru is contemplating legislation that would establish a regulated framework for online casino gaming and sports betting in the country. Last month, Bill 3397/2018-CE was introduced to the legislature by Percy Eloy Alcala Mateo of the Fuerza Popular Party. If approved by both Congress and the president, it may become law in as little as two months.

Proposed Rules

Under the terms of the new bill, online sportsbooks and casino sites would be allowed to operate in Peru, and be required to pay a tax of 12 percent of revenue. The language of the text also contains various rules governing the operation of these gambling enterprises, such as a prohibition on underage gambling, and penalties for violations.

The most controversial section of the bill is the mandate that operators pay an upfront sum of around $166,210 to cover payouts to players, as some industry groups feel that this figure is too high and would be more reasonable with a required payment of perhaps $50,000. Although the full sum would likely be no problem for larger internet gambling companies, it may be too burdensome for smaller entities, especially local Peruvian organizations. Commenting upon the proposal, Luis Felipe Cornejo, the general manager of Sportlimba.com, stated that “if the bar is set too high, it will hit the formal gambling houses and the informal ones will remain illegal.” Negotiations among various stakeholders are expected before the final version of the bill is agreed.

This legislation is the culmination of more than a year of effort by the Peruvian gambling regulator Dirección General de Juegos de Casino y Máquinas Tragamonedas (DGJCMT), which is a division of the Ministry of Foreign Trade and Tourism. The leader of the DGJCMT, Manuel San Román (photo), has long urged Peru’s lawmakers to set up a regulatory framework for online gaming. Way back in May 2017, he explained:

“It is our task, as regulators, to make every effort to ensure that this activity [online gambling] is conducted with honesty, transparency and equal conditions for all; especially with proper protection to vulnerable groups of the population and taking care that the activity has full provisions against money-laundering and the financing of terrorism – issues that must be firmly legislated in a sensitive activity such as gambling.”

Current Climate for Online Gaming

Peru’s government basically takes a hands-off approach when it comes to online gambling, with this type of real money gaming neither specifically approved of by the law nor criminalized. This is true both for individual customers as well as businesses, meaning Peru currently has a lucrative gray market for betting services.

While local firms are able to offer online gaming without being penalized by the authorities, at present, they must pay the regular income tax that all corporations are required to do. Nevertheless, there’s no specific tax on internet gambling activities.

Live Gambling Huge in Peru

Although Peru doesn’t immediately come to mind when thinking of prominent South American nations, it is a politically stable country, and with a population of about 32 million definitely has a large player base from which to draw upon. Furthermore, Peru has a manageable unemployment rate of just 5 percent, and has a vibrant tech industry, with Peru-based Universities turning out thousands of software engineers and IT specialists each year.

We may perhaps be able to get an idea of the possible success of a Peruvian licensed online gambling economy by simply looking at the offline gaming scene. There are a couple dozen casinos, a few brick-and-mortar sportsbooks, hundreds of slot parlors, a national lottery and a single racetrack, which in 2017 generated gross gaming revenue in excess of $750 million. All of these enterprises are overseen by the DGJCMT, the same organization that is expected to be the watchdog over the legalized online gambling industry if approved.

Peru also shares a border with Brazil, the continent’s most populated country with 208 million people, but where gambling is still illegal. As a result, gamblers in Brazil are at risk of being drawn to illegal gambling dens and falling prey to scams, or being prosecuted by their government for illegal gambling. Peru therefore has the opportunity to capitalize on the huge Brazilian market, while providing the nation’s citizens with a safer gaming environment, both online or at its land-based venues.

Rivalry With Colombia?

Neighboring Colombia has been licensing online betting websites since the middle of 2017, becoming the first jurisdiction in South America to do so. The Colombian gambling authority Coljuegos claims that it has already derived about $13 million from its 15 legalized online gaming sites.

As part of its promotion of state-supervised gambling, Colombia maintains a blacklist of some 1,800 betting websites that are operating in contravention of the law. These URLs are being blocked by the police and ISPs. While there hasn’t been any serious talk about compiling such an extensive blacklist in Peru, there are hints that some kind of website blocking may be enacted in the future.

Effects

The institution of clear and fair rules for operating internet gambling portals that serve Peruvians will undoubtedly attract international gaming companies. The proposed tax rate of 12 percent is quite low compared with other jurisdictions around the globe. In Europe and the UK, for example, operators are used to paying taxes in the region of 50% or more. At the same time, the local culture of gambling is fairly healthy, and so there’s a built-in market of Peruvian citizens who are comfortable with the idea of betting on gambling games. In fact, observers predict that Peruvian online gaming could be worth as much as $200 million per year. Taxes collected from the industry could subsequently be used to fund a number of projects, including healthcare, social security and national defense programs, in the process benefiting the whole of society.

Some foresee a role for Peru as the “Malta of South America,” referring to the large number of internet gaming houses that hold licenses from the Mediterranean island nation. Indeed, the DGJCMT receives high marks from gambling concerns that appreciate the speed with which it has historically processed license applications for land-based gaming facilities. Assuming such competence and alacrity carries over into the online realm, Peru may eventually make an enviable name for itself in this sphere too.