Peru Regulates Online Sports Betting and Gaming, Aiming for Millions in Revenue
Peru’s Ministry of Foreign Trade and Tourism (Mincetur) is implementing new regulations for online sports betting and gaming platforms. These platforms must apply for authorization to operate in the country between February 13 and March 13, 2024.
Mincetur clarified that companies meeting the requirements and receiving authorization will be subject to taxes starting April 1. Failure to obtain authorization will result in a fine of at least 150 Tax Units (UIT), equivalent to S/ 772,500. Additionally, companies may face criminal charges and be banned from operating in Peru.
Expected Revenue
According to Juan Carlos Mathews, head of Mincetur, the Peruvian government anticipates collecting approximately S/ 162 million annually through this regulation. These funds will be invested in tourism revitalization, tourism infrastructure projects, sports promotion, and mental health programs. Mathews emphasized that the new regulations will not affect bets or prize payouts.
Mincetur has identified 115 companies offering online sports betting and gaming services in Peru, with 86 based abroad and 29 operating within the country.
Mathews stated, “The implementation of Law N° 31557 and its regulations will regulate online gaming and sports betting, creating a regulated economic sector with tax revenue. Most importantly, it will provide security for bettors, promote responsible gaming, and formalize the activity.”
Challenges in Regulating Foreign Companies
Tax lawyer Jorge Picón Gonzales noted that Peru’s annual tax revenue is S/ 150 billion, and the tax on online gaming and sports betting is expected to contribute only about 0.1% (S/ 162 million annually).
Picón, a partner at Estudio Picón, expressed skepticism about the ability to tax foreign-based companies, citing a “lack of control.”
“They openly say that there are 86 non-domiciled companies, but there is no way to control them. For example, for years there has been an attempt to tax companies that provide services such as Netflix, but it cannot be done because there is no capacity to control it,” he said.
He added that there is no global model for taxing multinational corporations. “When the reality of what is collected in a year is seen, surely not even 10% (of what is estimated) will be achieved,” he predicted.
“This is a declarative norm, because they had to do something, but for its practical effect of collecting S/ 162 million it seems out of reality,” the tax expert asserted.
Luis García Romero, a partner at Estudio Muñiz, believes companies are more concerned about the administrative aspects of the new regulations. Failure to register within the specified timeframe could lead to penalties.
He also mentioned the 12% tax on net profit. “There are some doubts in the market regarding this rule, since it taxes Peruvian and foreign companies. There is a question about how easy it will be to control these companies,” he stated.
García warned that inconsistent enforcement could penalize compliant companies while benefiting informal operators who find loopholes.
About the Law
Law Nº 31557 aims to protect players from potential non-payment of prizes.
The law stipulates that only adults, whether Peruvian or foreign nationals, registered on authorized online gaming or sports betting platforms can participate.
Physical locations for online sports betting can be dedicated establishments or businesses with other primary activities.
The law mandates that players must pay for bets using currency, credit cards, debit cards, or other payment methods, excluding cryptocurrencies. Winnings can be collected through the player’s chosen payment method or via a bank account in their name, supervised by the Superintendence of Banking, Insurance and AFP (SBS).
This marks the first time Peru has regulated this economic activity. In South America, Peru is the third country to regulate it, following Colombia and Argentina (in the provinces of Buenos Aires, Córdoba, and Mendoza).
Key Figures
- Mincetur estimates that the total amount of bets placed in Peru in 2022 was approximately S/ 3.8 billion.
- Global gross revenue from online gaming reached US$ 102 billion in 2022, according to a study by H2 Gambling Capital.
Stay ahead of the game in the licensed betting world – get the latest insights at LicensedBettingSites.com.
