Jonathan Felix, gaming consultant and CEO of global business company De Peru, explains to Zach Thomas Akou the impact of Peru’s new gambling law and how the industry has weathered it.
On June 28, Peruvian President Dina Boluarte signed into the country’s new gaming law. This law was intended to solve many of the problems of the previous law, Law No. 31,557.
The law, signed into law by former President Pedro Castillo in August 2022, marks the long-awaited regulation of the country’s gaming sector. However, Felix said the law faced criticism from industry groups for having four major flaws. These are:
- Retail licenses can be expensive
- Lack of clarity regarding offshore taxes
- Mandatory use of the .bet.pe domain
- Too short time frame for industry to adopt the law
start from scratch
As a result, the new law has taken steps to correct these deficiencies.
The law itself came about as a result of a series of strong discussions between multiple stakeholders, including gaming industry associations, multiple government departments, trade unions and civil society.
Felix said Peru’s gambling regulator, the Ministry of Foreign Trade and Tourism (MINCETUR), has also “invited all national and international stakeholders to review the document and make recommendations,” with more than 700 responses in total. said.
“This was an unprecedented event in the history of public consultation in terms of the preparation of the technical regulation of legislation in this area,” he says.
expensive retail license
Under Law No. 31,557, businesses seeking to offer gambling in Peru were given two options regarding licensing. Retail gambling operators can apply for the first type of license and the second type is the online-only license.
According to this first law, a retail license costs 24,750 soles (£5,300/€6,300/$6,700) per store. In comparison, the total cost of online licenses exceeded £215,000. This was opposed by the gaming industry as Peru’s major retail betting operators are expected to pay much higher gross licensing fees than online operators.
As a result, the new law abolished retail licenses and created a single online license instead. MPs have decided to triple the cost of the new uniform license type to £645,000.
Felix says the license fee is not a one-time expense in Peru. Rather, they are bank letter guarantees presented to the government. A security deposit acts like a security deposit.
This is intended to ensure that operators comply with the license terms and conditions. If you choose to exit the market, the funds will eventually be returned to the operator.
Felix emphasizes that the Peruvian gambling market, like the rest of Latin America, operates primarily on an omnichannel basis.
“We can conclude that this model will hold for the next 10 years,” he says. “However, 85% of sales could be concentrated in the online channel and 15% in the retail channel.”
Uncertainty about taxes
The industry has also expressed concern about the uncertainty over what tax burden offshore operators will face.
In the original version of the law, businesses headquartered in Peru were subject to a 12% tax on their income. However, it is unclear whether foreign businesses will be subject to the same tax.
The new regulation was intended to clear up this ambiguity by creating a single point-of-sale tax of 12% for all companies providing services in Peru, wherever they are based.
Operators already active in the market also opposed mandating the use of .bet.pe domain addresses. Felix said he did so because it “has a commercial impact on changing the domain of the platform on which it operated at the time.”
As a result, the new regulation expands the rules to allow licensed platforms to use any of the following domains: .bet.pe, .bet, .com.pe, .com, .pe.
Short time to hire
The final reason Peru chose to change its gambling regulations concerned the time period (60 days) during which operators needed to understand the new legislation.
By law, this deadline started as soon as MINCETUR finalized the technical regulations of the law. According to Felix, this period was “very short actually.”
The new rule then includes a provision that doubles the period of employment to 120 days.
Other legal provisions
But new laws didn’t just exist to fix past mistakes and controversies. New elements include mandatory requirements for customer know your customer (KYC) checks. In addition, only licensed businesses are permitted to sponsor sports events or partner with athletes.
The law amends Peru’s penal code to criminalize the practice of conducting an unauthorized foreign gambling business. This carries a maximum penalty of four years in prison.
new horizon
Felix said the new rules are a positive development for Peru’s gaming industry, alongside a strong gaming regulatory outlook.
“This puts Peru in the global spotlight as one of the seven attractive markets in Latin America, along with Brazil, Mexico, Argentina, Colombia, Venezuela and Chile,” he says. . “The maturity of the market is clear.
“We expect this law to facilitate further growth and consolidation of the Peruvian market in the coming years.”
For Felix, the thoughtful nature of the new rules comes as a result of the government’s involvement in the reform process with many high-profile players.
“There has been broad and active participation in discussions and debates on the draft amendments to the law and technical regulations,” Felix said.
“The final result of this legislation is a reflection of this tremendous effort and participation.”
