iGaming Daily

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Brazil and Latin America have both long been touted as the next frontier for global iGaming as the new regulatory regimes open and sports frenzied fans become paying customers for some of the world's biggest regulated operators. None more so than in Brazil which opened its regulated sector to much fanfare in January but the Ministry of Finance's aimed tax rises are quickly pouring cold water on that excitement. It's not all bad news though as Peru goes against the global grain to posit tax cuts while there are legislative efforts in both Ecuador and Chile. Welcome back to iGaming Daily brought to you by Optimove, the number one CRM marketing solution for the iGaming market. I'm Charlie Horner and joining me today for this whistle stop tour around South America are two of our resident experts, SPC Noticias reporter Damian Martinez and SPC Noticias Brazil's Ana Maria Menezes. Damien, thanks for joining us. How are you doing today? All good, Charlie. Thanks for inviting me here. Brilliant. And Ana, it's great to have you on the show. How are you doing? Hi, Charlie. It's my first time with you being the host, so I'm excited. You already have a good narrator voice, so I'm already feeling pretty good and ready to tackle the Brazilian sports betting sector news. Excellent. I'm excited to be doing this with both of you. yeah, Brazil is such an exciting market and we've covered it and you've been covering it almost nonstop since the market launch in January, And less than nine months into this new regime and Brazil's finance minister is looking to raise taxes. That can't be a good sign, can it? Oh, yes, not at all. So the Brazil, Brazil's finance minister is called Fernando Daigi. That's his name. And he's pretty against the sports betting market in general. He's been pretty vocal about it. He really doesn't get, he doesn't hold back when it comes to saying that he's against it. And he already said in an interview that if he could, he would put a stop to it in general. That's what he said. One of the strategies that the government has now in order to raise the tax betting, the gross gaming revenue. Uh, what they're doing is increasing from 12 % to 18%. And this could be put to action, um, probably in the next couple of weeks, um, because the government is trying to sort of replace the gap in taxation. And this is what they're looking for looking for reasons to raise taxes and the sports betting industry. It's a pretty spotlight. If I can say this, just like, it's a big, uh, lining. So it. It gets a lot of attention. There's a lot of money going around. And for them, this is one of the reasons to raise the taxes on it. It's actually just to give you an example, it's expected to pump into the economy 1.7 billion reais by 2026. It is a lot of money. However, what the government doesn't see is that by raising this so much, they are pushing companies outside of the country. And not only that, they're pushing players. the illegal market as well. Yeah, that's a well trodden message from the gambling industry that raising taxes would send players to the black market. But I guess it's only amplified in Brazil given that it was all grey less than a year ago. I'm really intrigued by what you said at the beginning, that the finance minister, if he could have it his own way, would just scrap the entire regime. What's his position in the government in terms of his relationship with President Lula? Is he sort of a right-hand man? Would he have similar political views? Is that something that the president himself might have an opinion on? Yes, Lula has also been pretty vocal. He already said, and using some words here, it's an epidemic, it's a problem, it's a health issue. So they mentioned that specifically with people addicted to gambling. And it is a concern and it is a health and public health concern. However, the whole fault at this is being placed on sports betting companies, which again is something that looking from this perspective is pretty nevermind it and too simple. There are a lot of factors around it. So people being addicted to gambling and how to deal with that is not by pushing those companies out. Because the illegal market is always going to be here. So how do you push players to be taken care of and to be led in a way to the right tools, to the right places so they, if they express gambling addiction symptoms, who's going to take care of that? It's not going to be the companies in the illegal market. They couldn't care less about that. So how, how, how does the government think that pushing those companies aside is going to be of any help. Again, I don't think it makes sense, but again, very narrow minded, very simple. And what they want, and this is something common for governments in general, is to have the public appeal. And this is very, it has a big public appeal to the Brazilian community in general. So yes, this this is again, a point of view, but the government has been pretty vocal about being against sports betting. And the regulated industry can't be reacting too positively to this. What's the reaction been like from, say, the IBJR, the Responsible Gambling Association of Brazil? Yeah, so they released in July, they released a statement following together with Abra Jogo. So it's the Brazilian Association of Games and Lotteries. Also with ABFS, which is the Association of Pets and Fantasy Sports. Also with I gaming, which is the association of international gaming. They put together a whole bunch of institutions and organizations to put to publish one specific note. And they said that those measures already compromised the legal operation of companies here in Brazil. And they said in quote here that international experiences such as Italy and Spain already demonstrated that excessive taxation in newly regulated markets could lead to the spread of the illegal market and with that the loss of money going to the public saves and also less regulatory efficiency. So they're saying this and they have been saying this for a while. I to our listeners, if you've been listening to at least from the Brazilian and Latin American part in general, we always talk about this. It's not news just like, oh, if you keep raising the taxes, it's going to backfire. We say this in a lot of markets as well. But there is a way to not keep repeating that if the regulators don't understand that as well. So we have to keep saying it because they seem not to listen. yes. Indeed. Yes, absolutely. One of the big effects that I foresee from tax rises is just regulated operators reduce an investment in these key markets and maybe less so in Brazil because it's such a big opportunity. I still would imagine that the investment in those markets will reduce. Very briefly, because I do want to bring Damian into the conversation as well, but hot off the presses that Flamengo has signed a huge sponsorship deal with Kaizen Gaming's brand, Batano, but there could be an impact on this deal if taxes are to rise. Could you just briefly explain what all this is about, Ana? Sure. Flamengo has just announced Today when we're recording this episode that they have a new sponsor like the main sponsor which as you said is Betano. However, the amount of money coming with this deal which could be up to 200 million reais could place Flamengo in the top 20 main sponsorships in football. mean in the world. What does it say to the government? This is the question. If they're already trying to raise the taxation on sports betting, considering that with the justification of they have a lot of money, why wouldn't we tax them? What does this amount being the biggest in Brazil and one of the biggest in the world, what does it say to the government? Does it maybe say we have the money for that? We can pay for that. For some people in the industry have been reading it has some bad sides. which we have to wait and see how it develops, of course. We cannot come up with firm thoughts on this right now, but it is something to think about and how this could affect the government, how they see the sports betting industry in Brazil. Yeah, mean, listeners can head to SBC United CS Brazil over the next couple of weeks as a reaction continues to come in towards this story. Damian, I'd love to bring you in into the conversation now because it's like I said at the top of the show, it's not all bad news because Peru is looking to reduce taxes or rather I should say roll back on some controversial rises. Could you tell us about this story and what this is all about? Yes, Charlie. Luckily there has been some good news in the rest of Latin America last week. Well, first we can start with Peru. In early 2025, country began applying the selective consumption tax to the gaming and baiting industry with the goal of raising more than 280 million soles, which is the currency of Peru, that is almost like 80 million dollars. However, there is a Peruvian congresswoman, which is named Lady Camones, that has presented a proposal that would drastically reduced the tax burden on the market. Camones has introduced a bill that would cut the tax by up to 90%. She explained that this is because the tax would only encourage the illegal market, given the digital nature of the business of online gaming. And there are no similar precedents in model regulations. There are still no dates to discuss this project in the Congress. So we will have to wait and see if this proposal moves forward in the country. Sure. And I'm really intrigued by this one because Peru and Brazil are two relatively new markets. OK, Peru's maybe coming towards 18 months since it launched, Brazil a little bit newer. But they're taking two different approaches to this. So Damian, why do you think that Peru is looking to reduce the tax burden on operators and maybe Brazil is looking to increase that pressure? Well, Charlie, Actually, I think that this is kind of a unique thing for Peru because some of the arguments that many spokesperson from the industry are giving is they're saying that this law, this tax is discriminatory and creates unfair competition since while foreign companies are allowed to pass the cost of the tax to onto consumers, Peruvian companies are forced to vary directly. So with the tax deck, the government wants to increase tax collection. But I think that the main reason for this reduction is to correct this problem. So it sounds like two very different cases. just very briefly before we go to a break, what are your observations when it comes to this? I do believe in Brazil. We, the government specifically, they need to close the gap, as I mentioned from other areas. So the IOF and also they're creating a program to, to tax banks, sports betting companies, and basically the rich. This is a government program. So they've been pretty vocal about it. So it's not only a need in their views, but it's also, it's a specific program that the government has. problem has been promising since the beginning of the mandate. So there's also that it's very political. The decision is very political. So I believe this is why we're going the different direction. Well, I did joke with Ted Menmure last week that this podcast was running the risk of becoming the Taxation Daily podcast. we'll leave it there and we'll go to a quick break and we'll come back and we'll talk about something else, shall we? Welcome back to iGaming Daily where today we are on a whistle stop tour of the biggest news from Brazil and Latin America. joined by Ana Maria Menezes from SBC Noticias Brazil and Damian Martinez from SBC Noticias. Damian, know, Peru is not the only good news story coming out of the region this week because there's some positive vibes coming from Chile. with Senate approval for online casino gaming coming in recent days. Could you give us the lowdown on this story, please? Yes, Charlie, like you said, substantial progress has been made in the bill that regulates online gambling platforms in the country. The Senate has approved it in general. The bill's objective is to formalize the platforms of resistor companies in the country under the oversight of the superintendency of gambling casinos, which, according to the bill, it will become the superintendency of casinos, betting and games of chance. Like physical casinos, online activity will be subject to a 20 % specific tax and to promote responsible gaming, a 1 % increase in the specific tax is established or will be established. In addition, the public establishes new source of funding for sports. Authorized platforms must pay an annual tax of 2 % of gross revenue from sports betting to the National Sports Institute. In addition, talking about licenses, temporary license procedures will be established for applicants who have not operated illegally in Chile in the previous 12 months. However, platforms currently operating illegally will only be able to apply for licenses 12 months after ceasing to operate illegally in the country. Excellent. Well, you know, there's been progress in the Senate. but we all know that these processes can be notoriously quite slow. So what are the next steps for this bill to become law and for there to be an online casino market in Chile? Well, this has been a really slow process. It has begun around 2022. So there are not such great expectations for this to move forward quickly, but the initiative will continue to be analyzed in the joint committees of economy and finance. and the deadline that they have a place for submissions has been for the 29th of September. we should hear something in the next six weeks, maybe in a couple of weeks after SBC Summit, which is exciting. That might dominate some of the conversations on the LATAM side of the show. So what one's keeping note of. What's the potential of the market in Chile? How big of this? How big a market would this be for the region? Does it compare to Brazil or is it more akin to like Peru or Colombia? How should we assess this opportunity? Well, in terms of market size, think Ana would agree that I don't think anyone in Latin America can compare to Brazil. They are a whole continent on their own. But the Chilean market, I also won't think that it will be like the Peruvian market. If we look at the numbers, Chile has a population of almost 20 million and Peru has 34 million people in the country. So I think it will be a smaller market than them. Brilliant. Now let's head further north in the continent towards Quito because there's a movement for land-based casinos to return to Ecuador. What's the story here? Yes, Charlie. Well, Daniel Novoa, The president of Ecuador has announced last week that a referendum could be held on December to allow the country's citizens to decide on several key issues, including reforms to security, employment, political structures, and even the reopening of land-based casinos. The referendum will explore the idea of reopening gambling halls in Five Stars Hotel. The idea is that these hotels would pay a 25 % tax on their sales. The president has said that the initiative is supposed to boost tourism and generate tax revenue. There's still a doubt whether the referendum will be held or not because the justice system in Ecuador has to review all the questions that the referendum will have. and they will have to approve them. So they're still not yet approved the referendum. another slow process potentially on the cards there. yeah, we'll continue to monitor that one and listeners can keep up to date with all of those developments on SBC Noticias. I want to just have a little bit of a debate to close the show really, because we've had plenty of news from Latam and Brazil and we've We've dissected it all in the show today. Some good news, some not so good news. Is the region still a hotbed for growth for global iGame? And Anna, I'll come to you first. What do you think about this? Yes, I do believe so. We have in comparison with when we look at South America, life in America in general, we have too many different things coming from this part of the continent. What I mean by that. is we have people looking at the industry in a different way. We have governments looking, again, different countries very close to each other, having different measures about the same thing. So just as an example, Colombia, Peru, and Chile, and Brazil, when we're talking about we're all very close, but we're all going towards different decisions. So, and Brazil are worried about taxes. We have Peru developing little by little actually, pretty fast, their own regulation. So, believe we, okay, I believe if an operator doesn't really want to invest in Brazil right now, but they're looking at Peru, they can. If they want to invest in Peru, but they're still a bit, how does the market work there? They can invest maybe in Brazil. So, there's a lot of space here. So, I do believe we have, different options for operators who are looking from different points of view as well. So if their goal is one, we have loads of countries that can attend to this goal. So yes, I believe we're a diverse continent in general, and that applies to the petting industry as well. I don't know if Damien agrees with me, but I do see that they have many options to choose from. We're a pretty big part of the continent, so yeah. Yeah, I definitely agree with Ana. There's a lot of room to grow in Latin America. I want to add, for example, Paraguay. They are opening their market. They used to have a monopoly on sports betting and online gaming. And they are open to new operators. Argentina has a lot of provinces that they're still not regulated. Chile is, let's say, starting to to expand and to open. Peru has a lot of room to grow. Colombia is a mature market, but yes, definitely. Latin America is still a good place for online gaming. Excellent. That's what we all want to hear. Brilliant. Ana, Damian, thank you very much for your sharp analysis today. And if listeners want to keep up to date with all the stories that we've mentioned, we'll leave some of the links in the show notes. Thank you once again for listening to iGaming Daily, come back tomorrow because we'll have all of the latest news from the global gambling sector.