Chile is transitioning from an unregulated grey market towards a formal regulatory framework for online sports betting and casinos, writes Lauren Harrison.
And with expected annual revenue of more than US$600 million (£468m) and a 96 percent internet penetration rate, it is positioned as one of the most exciting emerging markets in Latin America.
While the bill to legalise online gambling still hasn’t fully cleared the country’s legislative process, it’s only a matter of time.
As momentum builds, operators are preparing for the challenges ahead – many of which are unfamiliar, shaped by a framework that differs from any other regulated market.
To explore this unfamiliar territory, iGamingFuture invited Latin American gambling guru and Founder and Managing Director of Atucha Strategic Advisory (ASA), Ramiro Atucha, to talk to our Content Editor Curtis Roach for an in-depth, two-part, interview on Chile’s long-awaited regulation – and to share insights on how operators can prepare for the challenges ahead.
This is an iGF exclusive you do not want to miss and one of the most in-depth looks at Chile’s evolving regulation – read on!
Chile is moving closer to regulating online gambling. What do you believe operators need to be preparing for now in order to succeed in the newly regulated Chilean market?
“The most consequential issue in Chile’s incoming regulation, and still the most unresolved, is the cooling-off period.
“The current proposal would prevent operators that were active in the Chilean market before regulation from operating for 12-months after enactment, alongside a significantly increased retroactive tax rate on their historical earnings.
“Both sides of the argument have a genuine point.
“Online operators contend that it violates equal treatment before the law: They were serving Chilean players in what was, at best, a legal grey area – not something expressly prohibited.
“Land-based casinos push back with an equally valid framing: Those operators built player bases and brand recognition during a period when they had no legal standing to do so, and simply opening the market without any levelling mechanism would hand them a structural head start.
“The real problem is that if the cooling-off period survives in its current form, virtually every established operator in Chile, including most of the biggest names in the global market, would be excluded for an entire year.
“What that produces is a first year of regulation where players are being served by weaker, less competitive products.
“Many of those players won’t wait. They’ll find the same offshore operators they’ve always used, probably through VPNs or mirror sites, meaning the very operators the regulation is trying to push out may still keep operating, just outside any framework; while the government loses the tax revenues it was counting on.
“Beyond the cooling-off question, the structural preparation that actually separates operators who will be ready from those who won’t is the local entity requirement.
“The bill mandates that operators incorporate as a closed Chilean joint-stock company, with all beneficial ownership disclosed to the Financial Analysis Unit.
“For most major international operators, particularly those with holding structures in Malta, Gibraltar or Curaçao, unwinding that complexity to satisfy Chilean transparency requirements is not a quick exercise. And it needs to start well before legal approval, not after.
“It may be worth considering engaging with Chile’s gambling authority, the Superintendence of Gambling Casinos (SCJ), sooner rather than later.
“Regulators in a pre-launch phase are often more accessible than they will be once the market opens.
“The relationship built in the next 12-months has real value: For understanding how the regulator is interpreting the bill’s grey areas, and for signalling that you’re a serious, compliant operator rather than someone who’ll show up at the last minute.”
Regulation often brings both opportunity and complexity. What are the biggest operational and compliance challenges operators are likely to face when entering Chile under the new regulatory framework?
“There are the standard challenges every new regulated market brings: KYC, AML, responsible gambling tools, geo-blocking and local payment integration. Every operator entering a new jurisdiction has done this before. Chile has those, but it also has a few that are genuinely specific to this market and shouldn’t be underestimated.
“The payment infrastructure problem is one. The bill requires operators to work with payment processors that are registered and compliant in Chile. The issue with this is that those payment processors don’t have experience working with gambling operators.
“The compliance standards, the transaction monitoring requirements and the speed of settlement are all sector-specific, and it’s not something Chilean payment companies have had to deal with before.
“Building deposit and withdrawal stacks that work efficiently on day one, in a market where the banking sector has been instructed to treat gambling transactions with suspicion, is going to take real time and effort on both sides.
“Then there’s the biometric identification requirement, which is unique to Chile in the regional context. The bill mandates biometric ID verification for account opening, not just document upload but a full connection to Chilean identity infrastructure. That means either building it locally or finding a Chilean technology partner who can.
“Neither option is available off-the-shelf right now because there’s no licensed market for these services to have developed against. Operators will be building this alongside regulators who are still defining the technical specifications.
“Advertising is another area where the picture is evolving.
“The original bill, alongside several subsequent legislative proposals, contains significant restrictions, including what looks like a total ban on whistle-to-whistle sports betting advertising and on football club sponsorships.
“For operators whose Chilean brand presence was built entirely around ANFP partnerships, that’s a forced pivot at the worst possible moment.
“The Kast government’s more market-open instincts may soften some of this. But the legislative direction of travel has been toward restriction, not liberalisation.
“Finally, the compliance architecture requirement. The bill requires operators to give the SCJ remote access to their systems: Real-time visibility into game logs, player accounts and transaction data. That’s not a standard feature of most European licensing regimes.
“Building a technical integration that satisfies a Chilean regulator’s audit requirements–without compromising the security or integrity of a platform running across multiple other jurisdictions–is a serious systems challenge that should not be left until late in the process.”
Editor’s Note:
It’s clear that Chile’s new gambling framework will present multiple, unique challenges for operators and service providers.
From punitive taxes and cooling-off periods that could curtail legal participation, to new payment systems, integrated identity checks and direct information sharing that provides real-time regulatory access to operators’ online systems, this regulatory set-up is no copy-and-paste.
Instead, it marks a fundamental shift that’ll force operators to rethink their entire playbook.
This is why Ramiro’s core advice is to start early. Build collaboratively. And establish relationships not just with service providers but also with the SCJ, which is likely to be more accessible now, than when the regulations are finalised.
Join us for part two, where Curtis and Ramiro dive into the specifics of Chile’s proposed tax regime and hear how the Chilean market will develop.
