Summary of findings: Final decision or outcome reached after considering all evidence and arguments presented.
Peru's Crackdown on Illegal Gambling:
Peru's Ministry of Foreign Trade and Tourism (Mincetur) has made impressive strides in combating illegal online gambling, claiming a 40% reduction in illegal services since the enforcement of Law No 31557. This law, aimed at regulating digital sports betting and gaming, inaugurated an era of transformed gambling in Peru.
Over the past year, Mincetur has granted licenses to 60 technology platforms and registered 280 service providers, attracting international heavyweights like Stake, Rush Street Interactive, and Betsson into the Peruvian gambling sector. As a testament to the law's success, the number of legitimate sports betting venues has skyrocketed, bringing the total to 4,516.
Mincetur's efforts to curb illegal gambling have been relentless. Through the General Directorate of Casino Games and Slot Machines (DGJCMT), it has removed 15% of illicit gambling sites and significantly reduced the overall black-market supply by 40%. Their efforts have also extended to closing illegal establishments, coordinating actions against illicit platforms, and working with payment institutions to block transactions with unlicensed operators.
Mincetur aims to establish Peru as a regional leader in gambling regulations, following in the footsteps of Colombia and Argentina. The Ministry highlights the regulation's benefits, such as formalizing the digital gambling sector, promoting a safer environment for operators and users, and creating new investment opportunities. Efforts to promote responsible gambling include educational campaigns in schools and training for betting companies.
Despite these advancements, the gambling industry faces new challenges. The impending increase in consumption taxes—from 0.3% to 1% starting July 2025—has sparked concerns within the sector. Gonzalo Perez, CEO of Apuesta Total, fears that this tax hike, coupled with the existing 12% Gross Gaming Revenue (GGR) tax, could drive operators and players back to the black market, jeopardizing the gains made through regulation.
Legal experts share similar apprehensions. Nicolás Samohod Rivarola, head of gambling and betting at the Vidal Caceres law firm, warns that the increased tax burden on licensed operators might become "unconstitutional" due to its potentially excessive nature. This, he warns, could force many stakeholders to reconsider their continued operations in the Peruvian market.
As Peru continues to establish itself as a regional authority in gambling regulation, the impact of the upcoming tax changes will play a crucial role in shaping the country's online betting market. The industry will closely monitor Peru's regulatory landscape, watching for signs of sustained, responsible growth or regression towards an unregulated market.
Peruvian Gambling Industry's Triple Threat: A Look at the Potential Impact of Consumption Taxes
Peru's gambling market is bracing for a major change with the upcoming increase in consumption taxes, set to rise from 0.3% to 1% on every bet, beginning July 2025. Three potential impacts are possibly on the horizon:
- Consumer Behavior: The increased tax may negatively impact consumer perception of gambling services, prompting users to turn to unregulated platforms to avoid the cost hike.
- Industry Struggles: In addition to the consumption tax, operators already pay a 12% Gross Gaming Revenue (GGR) tax. An additional 1% tax on bets could double the overall tax burden on betting companies, straining their profits.
- Competitive Landscape: With the increased tax driving up costs, the regulated market may become less attractive, potentially countering the progress made in reducing illegal gambling.
The Challenging Road Ahead for Regulation
- Illegal Gambling Resurgence: The increase in taxes could weaken Peru's efforts to combat illegal gambling if consumers seek cheaper alternatives in unregulated environments.
- Balanced Policies: To maintain effective regulations, policymakers must find a balance between generating revenue and keeping the regulated market competitive to prevent users from turning to illegal operators.
- Future Adjustments: The Peruvian government may need to reassess and potentially revise taxation policies if the increase in taxes has unintended consequences, such as reduced regulated market participation or increased illegal activities.
- If the increased consumption tax on bets from 0.3% to 1% starting July 2025 in Peru's gambling market is not well-received, consumers may resort to sports betting on unregulated platforms to avoid the increased cost.
- With the addition of the 1% consumption tax on bets, the overall tax burden on betting companies in Peru will double, potentially leading to struggles for the industry and impacting their profits.
- The regulated sports betting market in Peru, that has beenTransformed by the enforcement of Law No 31557, may become less attractive due to the increase in taxes, potentially leading to a resurgence of illegal gambling.
