American gambling: Discussions over legalization in El Salvador and Argentina
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The Ministry of Finance of the Central American country has presented a new law to the Legislative Assembly. It would provide the National Lottery (LNB) with the right to both oversee and run sports betting and online casinos nationwide. According to the bill the National Lottery will be able to grant licenses that would be valid for ten years and revoke them in case of any violations. Additional revenue is planned to be used for health and social programs.
If the bill will turn into law the National lottery will regulate traditional, instant, electronic lotteries along with sports betting, online casino (bingo, slots, card games, and roulette), and any other type of gambling which “may arise in the future”. Fees are to be determined in the near future. According to the bill an operator that has not been granted a license within six months will be considered illegal.
Casinos started to operate in El Salvador in the mid 90s. Licenses were granted by local mayors, who were also in charge of taxation. However, the Legislative Assembly have long been arguing this issue stating that casinos should either be banned or regulated via a centralized system.
Ivan Kurochkin’s comments
In the modern approach to the legalization and regulation of gambling, the unification of all verticals under one regulator is a common occasion. Among the established gambling jurisdictions that adhere to this concept are the UK, Norway, and recently — Ukraine, who adopted the Gambling Law in 2020 that provided for the creation of the unified gambling regulator in the country.
The emerging gambling regulations often require revision, taking into consideration the input from gambling operators, as well as the peculiarities of the country and its culture, in order to maintain a balance of interests for the state, operators and players. For the full-fledged development of gambling legislation, a single government authority responsible for the process is vital. In many cases, such authority is the gambling regulator.
We believe that a single regulator, consisting of people deeply immersed in the problems of the existing industry, will allow for a productive dialogue with operators to improve the gambling regulation.
I would dare to assume that a single regulator will take over part of the regulatory functions currently available to local authorities, however, one should not expect a complete abolition of the functions of local authorities in the regulation of gambling, which, most likely, will be given some freedom in regulating some local aspects with regards to gambling on the corresponding territory, as is done in many jurisdictions where there is a territorial division into provinces, counties and regions, for example Germany, where regulatory functions are shared between the state and the federal level.
We support the initiative to unite all verticals of gambling under one regulator and hope that the new entity will include professionals who will be able to build a productive dialogue with all the industry stakeholders in a sensible and open fashion.
Discussions have started in the province of Córdoba on the possibility to allow online gambling including sports betting. However, the region will face a real fight for it as not all the deputies support this idea. Some members of the local Church stand against the legalization, too. They claim that this can lead to the increase of problem gambling. Nevertheless the Lottery of Córdoba will be able to grant up to five licenses if online gambling is finally legalized. The fees for companies that would like to start operating in the regions are yet to be determined.
The province of Córdoba uses the Buenos Aires province and metropolitan area as an example. Online gambling is legalized there from December 9, 2021. It has been legal in 12 more provinces of the state. Considering the resources of the metropolitan area the revenue may be around US$2 million according to local business media.
Ivan Kurochkin’s comments
The gradual process of legalization of gambling, moving from province to province, is a natural reaction to the growing interest in gambling among the population, which, according to different sources, has not slowed down since the beginning of the pandemic.
The legalization of the gambling market allows the use of mechanisms to combat gambling addiction, but also, among other things, allows provinces to accumulate funds collected in the form of taxes and invest them in the development of socially significant projects and sports.
The most positive effect of legalization can only be achieved if operators are provided with easy entry to the market and balanced taxation, which makes entry into the market economically viable for most operators.
Additionally, in order to attract operators to the legal and regulated market, it is necessary to support the legalization efforts with ruthless actions against offshore operators by blocking sites, blocking payment systems working with such operators and limiting their marketing opportunities.
The Netherlands can be considered a good example of an effective fight against offshore operators, which successfully implements all financial blockages available to them and limits the marketing possibilities for illicit operators.
The parliament of the country has postponed the vote on amendments to the gambling legislation. The particular rules of taxation and regulation have remained undetermined for over a year. Discussions over the current amendments started in August.
It’s unclear when the Verkhovna Rada will vote on the amendments (or at least when they will be added to a legislative agenda). Head of the local regulator, KRAIL, Ivan Rudyi claims that the fact that gambling was illegal in Ukraine for around ten years has become an additional hurdle to establishing legal gambling fast and successfully.
Ivan Kurochkin’s comments
In 2021 there were a lot of changes in Ukraine aimed at launching and improving the operating conditions of the gambling business.
Unfortunately, we are forced to note that not all initiatives of the Ukrainian regulator find support from representatives of the country's legislative body, the Verkhovna Rada.
Gambling companies that have received the necessary licenses and started their work are actively voicing the need to adopt amendments to the Gambling Law and the Tax Code, aimed at liberalizing the conditions for doing gambling business in the country.
Foreign gambling companies, that are represented on the Ukrainian market by one casino and a small network of halls with slot machines, use every opportunity to draw the attention of the authorities to topical issues of interest to both foreign and local businesses - tax cuts, adoption of the certification process for gambling equipment, the introduction of the online monitoring system, which at the time being directly affects the cost of licenses for online casinos and sports betting (until such system is live, these licenses cost three times more).
The situation can be changed by the Bill 2713-D, containing the necessary amendments to the Gambling Law and to the Tax Code. Last week it was included in the agenda of the meeting of the Verkhovna Rada, but the deputies did not have time to consider it. The main reason is the political crisis currently unraveling in Ukraine. Legislators have to work on higher priority bills and tasks, and as we can see, this pushes the issues of the gambling business further back.
This may change as early as next week, during the last plenary session of parliament this year. If the deputies do not vote on the amendments, then the gambling business will face an unpleasant surprise at the beginning of next year, working on their tax reporting, since in Ukraine, the old version of the Tax Code is in force with regard to the taxation of the gambling business, in which the total tax burden can reach up to 60%.
Italy’s federal police force has arrested 12 suspects connected to its “Operation Game Over II” criminal investigation of illegal and mafia-associated gambling websites. They have been charged on counts of criminal conspiracy to carry out the “fraudulent conveyance of assets” through illicit online gambling businesses.
Investigators cited that the suspects were processing illegal online wagers via websites belonging to Malta-based businesses that held no licences to operate within Italy. The crime ring is reported to have developed a betting network generating a turnover of €14 million per month, helping criminals launder a net profit of circa 15% of wagers placed.