Currently, Chile is going through a situation that concentrates international attention and concern due to the still existing echoes of the social and economic breakdown that occurred more than two years ago. This has forced the Government to attend to the demands of the population. In the first attempt, Constitution modification was proposed, a measure that was not supported by the votes of the citizens. In any case, the interest continues to be focused on making the necessary adjustments to promote the development and well-being of the inhabitants of the Republic.
With regard to the gaming sector, we are witnessing how the main economic groups that control the exploitation of´land-based casino games are against sports betting and online gaming. From my point of view, these actions, and the arguments put forward to support them, demonstrate the interest of these groups in maintaining the status quo, with the clear intention of also taking over the potential market for growing sports betting and iGaming verticals.
In response, the Government is launching a strong campaign to stop the expansion of sports betting and online gaming, which affects companies that are operating in the market. In this sense, the Congress of the Republic has been discussing bills that seek to regulate the online business, while progress is being made with other bills to ban the advertising of sports betting operators in the media and on the jerseys of local professional football teams. Simultaneously, the Municipalities of various regions of Chile try to develop oversight mechanisms to close the unlicensed gambling halls. In recent years, those establishments have opened throughout the country, mainly due to the high market demand during the COVID-19 pandemic.
LEGAL LOOPHOLE, ANALYSIS AND DEVELOPMENT OF THE ACTIVITY
In my opinion, I notice that there is a legal loophole that favors the exploitation of sports betting and online gambling. Faced with this reality, I think that, before proposing prohibitions, restrictions and sanctions, the authorities should analyze this phenomenon in more detail, understand it comprehensively and determine, based on this detailed study, the most convenient actions to follow in order to promote the controlled development of the legal iGaming sector in view of the coming years.
Given this situation, I share here what I consider to be the key points to examine the market and take advantage of the opportunity it represents for the public and private sectors.
1) Review of current legislation. The proliferation of gaming and betting houses throughout Chile reveals that there is a segment of the population that has been neglected for years. From my point of view, current legislation and the aforementioned projects need to be reviewed and updated to set a legal body that stimulates a controlled offer that meets that unsatisfied demand.
2) Internet penetration and financial inclusion. In LatAm, Chile is one of the leading territories in Internet penetration, with more than 90% of the population having web access. It was also the first country to deploy 5G telecommunications networks. Thus, today there are more than 25 million mobile phone connections nationwide. In the financial sector, Chile is also a model of financial inclusion in LatAm, with more than 51% penetration, following Panama, which leads with more than 52%. In the case of Chile, the banking sector is accepted by the population: more than 13 million Chileans have a savings account and more than 80% of this banked segment has a debit card.
3) The potential market and player’s current profile. Regarding current sports betting and online gambling progress, the annual sales estimate is of more than USD 700 million, with a growth projection of over USD 2 billion for the coming years only in this sector. Today, player uses mobile network coverage and innovative technology available to access gaming platforms and place bets on sporting events of interest, devoting considerable leisure time to enjoying the entertainment and the betting portfolio those sites offer. In the case of online casino games, the gambler in this segment is not willing to travel several kilometers to the nearest brick and mortar casino. In fact, with iGaming, they save time and money. Those who attend land-based casinos often choose gambling and betting rooms close to their homes. This is an important point that must be taken into account in the bills that are being discussed to regulate the activity.
4) The policies of the Chilean Government are not in tune with what the market needs to promote its development. As I stated above, the Government’s efforts are focused mainly on prohibiting, restricting and penalizing the exploitation of sports betting and online gambling, without taking into account that these actions produce the opposite effect. It is clear that Chileans will continue betting and that platforms will always find a way to continue operating, which will expand illegality. Added to this, there’s a lacking of a legislation that comprehensively addresses the problem and takes advantage of current opportunities, allowing the opening of the market to national and foreign investors, and favoring the development of the sector in the coming years.
5) Discouraging international investment and producing economic losses. Prohibiting gambling activity will only generate the loss of investments already made by bookmakers in various sectors, such as professional football clubs, which received significant income from sponsorship contracts, necessary to support the local championship. The suspension of investment in advertising will also affect the economy and the business strategy of multiple sports betting and online gaming companies. At the same time, it could cause the loss of thousands of direct and indirect jobs for Chileans who work in the operation of various national and international companies. Last but not least, there will be a negative impact at the global level, discouraging investments by major companies that follow the region with interest; especially Chile, which they consider an attractive market with great potential.
IN CONCLUSION
The Chilean market has all the necessary conditions so that based on an open, respectful and democratic debate among the stakeholders of the gaming sector a correct regulation is defined and approved. That would favor future development, thus exceeding preliminary expectations and projections that can be made about the first years of the evolution of this market, as the Colombian gaming market has shown.
As I mentioned at the beginning of this article, after the failed attempt to modify the Chilean Constitution, it is time for the political lobbies that seek to limit the sector to focus more on the comprehensive regulation of sports betting and online gambling in its different forms, allowing a greater opening of the market and a future consolidation, in order to avoid the current lack of control, reduce illegality and favor operators, suppliers, players and the general economy of the country.
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About the author
Jonathan Daniel Felix Vilchez is an executive with 20+ years of experience in the gaming industry in Latin America. He has been part of the staff of international companies with operations in Peru. In addition, he has provided advice to global companies based in the United States, Europe and Asia for the development of business and projects in the LatAm region.
Vilchez is CEO of Global Business Company of Peru S.A.C., a firm specialized in consulting and business development in gaming, financial sector and value-added services.