Post-elections scenario for iGaming in Argentina

After the next change of Government, Eduardo Morales Hermo analyzes the future of gaming in Argentina.

In a stark reminder of the difficulties facing the Argentine economy, the Central Bank announced overnight a dramatic tightening of restrictions on foreign exchange purchases. Argentines will now be limited to buying just up to US$200 a month, down from up to US$10,000 a month before the recent presidential elections, in an effort to conserve scarce reserves. The Peronist (in its extremist branch, the Kirchnerism, from late former President Nestor Kirchner) victory is further evidence that Latin America’s so-called ‘left’ is regaining forces after several years of conservative gains. Populist left-winger Evo Morales claimed victory for a fourth term in Bolivia last week amid opposition accusations of electoral fraud. And mass protests in Chile demanding higher wages and pensions have forced the resignation of the entire center-right cabinet. There have also been riots and protests in Ecuador and Peru.

WINNERS AND LOSERS OF ARGENTINA’S ELECTIONS
Former President Cristina Fernandez de Kirchner returns to power. Current President Mauricio Macri -who went for re-election- toned unexpected 41 percent results despite the defeat. Alberto Fernandez fitted the Presidency candidate suit well. Now, the hardest part is coming. Marxist economist Axel Kicillof, new Governor of the Province of Buenos Aires, also found the tone that Sunday night in the celebration. Re-elected mayor of the City of Buenos Aires’ Horacio Rodriguez Larreta achieved a record-breaking first round win. It was one of the few wins of Government Party Juntos por el Cambio. The overwhelming victory of Fernandez in the primary of August 11th had already caused a tremor in the markets with a sharp devaluation of the Argentine peso and an acceleration of capital flight, so the result of last Sunday was discounted and does not significantly modify the landscape of investors.

CODERE AND OTHER SPANISH COMPANIES IN ARGENTINA
For instance, main Spanish companies with interests in Argentina, such as Telefonica Group, Santander Bank, BBVA, Codere or Dia, did not register significant falls in the stock market opening. Up to now, caution reigns. The directors of the main Spanish companies expected a victory of Peronism (Kirchnerism) in the presidential elections of Argentina and they accepted with resignation the triumph of Alberto Fernandez over Mauricio Macri. It is clear that they are not particularly worried about Alberto, but his Vice President Cristina Fernandez de Kirchner. The sad memories of the expropriation of oil firm Repsol and the nationalization of local airline company Aerolineas Argentinas to the Marsans Group during the Kirchner government remain fresh among Spanish businessmen. However, the companies were also suffering the consequences of the economic crisis in which Argentina fell under the Macri government. In particular, banks and Telefonica are among the most exposed groups. Spanish companies met Alberto Fernandez in September and expressed their concerns on exchange control measures. However, companies confirmed they will maintain their investments in Argentina. The restriction on the acquisition of foreign currency announced by the Central Bank focuses exclusively on the purchase of dollars for treasury and financial speculation, said the president of the entity, Guido Sandleris. He didn’t forget to mention the future struggles with the International Monetary Fund (IMF) in the tough negotiations of the Argentinian debt. Anyways, the truth of the political and economic situation will be better known throughout the coming weeks.

HEADS OR TAILS FOR THE GAMBLING INDUSTRY
Heads – Horacio Rodriguez Larreta, Re-elected Mayor of the City of Buenos Aires
He has renewed his position with more than 55 percent of the votes, a massive support from citizens of Argentina’s capital. His re-election gives hopes to those expecting the online gaming and betting licensing tender to be implemented in the City of Buenos Aires. Many incumbents will be awaiting forthcoming events favorable to continue the license process in the City. It seems that things will be handled in the right direction.

Tails – Axel Kicillof, Elected Governor of the Province of Buenos Aires
The new Governor of the Province of Buenos Aires, a key territory in terms of economy and population, obtained 52 percent of the votes over 38 percent of current Governor Maria Eugenia Vidal. With a disastrous performance as Cristina Fernandez’s Finance Minister some years ago, during the election campaign, Kicillof opted for a moderate tone, until, on Sunday night, once he felt winner, he returned to the speech of a student leader. His election creates uncertainty about the Province’s launched iGaming licensing tender. Worries are focused on the possible ending of the tender process, knowing the extremist ideology and positioning of the new Governor. Companies (more than 15) that already complied with the tender requirements will be awaiting the outcome of this process and the possibilities of continuing the battle for a remote gaming license. Current Governor Vidal decided to suspend or put the tender process in standby after the negative results of the primary elections in August, and all the odds are that the new Governor might not be favorable to continue with the tender. However, other analysts say the tender will continue, but with some modifications to the process. The experience on his recent speeches regarding betting and gaming has not been positive. But it’s true that the Province needs economic resources and income from iGaming taxes would be very useful in that sense. Besides, multi-national operators that are participating on this tender expect a serious behavior from a serious Government of one of the most important nations in the Latin American continent, and that’s also a factor of pressure for Kicillof. We will have to wait until after December 10th to find out what is going to happen with gaming in the huge jurisdiction which represents more than 60 percent of the Argentinian gaming market.

Outside from these two strong territories, there will be further and wider analysis of the impact of the elections results to the gambling industry in Argentina, considering who stays, goes and comes in the different provinces, and if they will take responsible measures for the progress of gambling regulation in Argentina.