Chile’s government has proposed a 22% tax on online gambling revenue while allowing operators to maintain existing marketing contracts for up to a year, despite plans to introduce a total ban on betting advertising.
The measures were announced in a senate bulletin, which brings together proposed amendments to the country’s online gambling legislation, including 172 submitted by President José Antonio Kast’s government on 26 October.
Under the proposals, operators that secure a temporary licence would be allowed to continue advertising contracts they had signed before the law’s publication, but for no longer than one year.
There would also be restrictions placed on any advertising during this period. Television and radio adverts would only be allowed between 10pm and 6am, while all advertising would need to carry warnings about gambling addiction.
The blanket advertising ban would take effect 30 days after the regulator announced that all temporary licence applications have been processed.
Responding to the news, The Chilean Association of Online Betting Platforms (aPAL) warned an advertising ban would make it hard for regulated operators to compete with offshore rivals.
“If regulated platforms cannot promote themselves or offer competitive terms compared with illegal operators, the most important and fundamental condition for player protection will not have been met,” the trade body said in a statement.
Chile outlines 22% gambling tax proposal
The measures provide new details on proposals first unveiled by the government earlier this week, which would introduce five-year licences for private operators.
Operators would pay 19% VAT on the difference between stakes received and winnings paid, alongside an additional 3% tax calculated on the same basis.
Licences would carry an annual fee of 1,000 monthly tax units (UTM), equivalent to around €65,000 at current rates. A temporary licence would cost an upfront fee of 3,000 UTM (€195,000).
Operators that have already been taking bets in Chile would need to pay VAT liabilities for the last three years.
Promotional bonuses designed to attract or retain customers would remain prohibited, even if they were not publicly advertised.
The Senate’s Economy Committee began examining the amendments on Tuesday 27 October, and is expected to continue its discussions at a future session, although the exact timeline has not been announced.
Legal experts warn of regulatory uncertainty
The latest proposals come as a new legal opinion argues that Chile’s failure to regulate online gambling has created significant legal uncertainty.
The 53-page report, prepared by constitutional lawyers Arturo Fermandois and José Manuel Díaz de Valdés of Estudio Fermandois, concludes that lawmakers have a constitutional obligation to quickly establish a clear legal framework for online gambling.
As previously reported by NEXT.io, since July, offshore operators have been required to register with authorities and pay 19% digital VAT on transactions in the country. This is despite a Supreme Court ruling last year which banned online betting and ordered unlicensed sites to be blocked.
The report also questions the legal basis of court-ordered website blocking measures. In September, telecoms regulator Subtel ordered the blocking of 79 betting websites.
“The legislature is obliged by the constitution to legislate on this matter without delay,” the report said.