As Latin America continues to provide much intrigue and allure when it comes to iGaming opportunities, the potential of Peru shouldn’t be overlooked.
Analysing the regulatory framework in Peru, we spoke to Alejandro Rivero, CEO of Estelarbet, who detailed the impacts of the tax adjustments in the country and the importance of constant collaboration between regulators and the industry.
iGaming Expert: Can you provide us with an update on the latest developments within the Peru market?
Alejandro Rivero: I believe that we can balance the positive with the not-so-encouraging within the Peruvian market. On the one hand, a feeling of uncertainty and frustration emerges on the operator’s side when changes to the original legislation bills, regarding taxation or operational aspects, begin to appear. I am, of course, referring to the 1% ISC tax.
We have seen negative effects of such modifications affecting both customers and operators in other locations. An example can be Ecuador, where similar (not identical) taxing modifications were introduced towards sportsbook customers, affecting in a large manner the viability of the business, forcing actors to shut down operations.
On the brighter side, non-regulated gaming activity has reduced, according to various sources. The local regulation has begun its work in censoring such activity via digital actions, as well as cooperation with payment providers in order to control the money flows to unlicensed sites. This, for me at least, shows the first steps in the right direction, and that has to be acknowledged.
An increase of more than 650 new regulated retail shops in the past six months is also good news regarding the overall activity. A larger land-based presence for legal betting increases not only the volume of consumers but, in my view, also benefits the credibility of the activity within the population.
iGX: What are some of the main criticisms aimed at the ISC on iGaming operators in Peru?
AR: I believe that one of the main voices on the issue, ISC present, Mr. Gonzalo Perez, is spot on. One of the main problems that comes with the introduction of such taxing elements as the 1% ISC towards each bet is the operational modification that has to be implemented in the platforms.
Even though almost any new element can be adapted within a platform, this type of update takes time to be implemented, creating both risks of not being able to comply in time and creating additional costs for operators that might not have been included during an initial project evaluation.
Now, the effects on the actual business results is also a huge matter to consider because of the negative effect that it has over the licensed operators, that now have to charge and pay an extra tax, while for the non-licensed sites (that still exist in a large proportion within Perú), don’t apply, giving them plenty advantage in terms of reinversion capabilities and profits. In an absolutely licensed environment, with no unregulated activity, this tax would still represent an issue, but one that is shared by all operating parties. So, in a matter of speech, it would be fair. Not the case here yet I’m afraid.
iGX: How important is dialogue within the Peruvian market, between the industry and regulators?
AR: I believe that for any economic activity, having constant feedback and consideration of opinions is crucial in order to prosper, attract new business and create a transparent and productive environment. In the particular case of a newly regulated industry, this dialogue is even more important because both interested parties are learning to navigate in a newly established legal and operational structure. Most operators have experience in more than one market and can share the best practices in terms of regulation that’s beneficial for governments, local economies and operators. It has been proven that online gaming can provide enormous resources for regulated territories, but for those systems to prosper, transparency, goodwill and stability have to prevail since the very beginning.
To provide an example, I was a part of an international land-based casino company operating in Chile, thanks to the Casino bill approved in 2005. The national regulatory entity had to start training their people, creating documentation and procedures almost from scratch, and they turned to operators for help in most of the technical issues, and even for recruiting specialists. Although friction always arises, this type of collaborative behaviour allows the activity to prosper in a healthy way. Only when some modifications to the original conditions of licensing and operations began to appear, companies started to clash with the authority, with bad results in terms of fairness and results, and the country´s image in front of newcomer investors.
iGX: What impact do you believe will have on the growth of the black market and the economic impact of the sector?
AR: I believe that when regulations and regulators are not able to offer the best conditions for an activity, black markets are right there waiting to prosper. History has shown this effect many times. Hopefully, the Peruvian government will be able to create a fair turf for licensees, with a powerful system for diminishing unregulated activity.
Both protection and beneficial regulation must be in place for the activity to maintain a steady path of growth. This 1% tax, and any arbitrary new condition, can prove to be detrimental for the sector when not timely presented and discussed with those operators willing to comply and bring benefits for the local economy.
iGX: What steps do you believe could be taken to improve the regulatory changes?
I believe that the first action can be to freeze the implementation and provide sufficient time for all licensees to adapt to the measure, and in the meantime, to hold enough instances of debate, to take all sides and proposals into consideration. Common ground can be reached via adjusting the original tax, creating other means in which the companies can better support the government in their goals (means that do not affect the activity in such a heavy manner).
By listening to tax and financial specialists that have been on both sides, public and private, we can understand where some of these ideas come from, but long term. Strategic views tend to eradicate most ideas of the type presented here.
iGX: How important do you believe the SBC Summit is when it comes to the development of emerging markets?
AR: The SBC summit enables debate and shared knowledge within its forums. The Summit helps established organisations to share their knowledge and experience, helps newcomers to learn from that experience and helps regulators and operators debate in an organised and amiable setting.
For new markets, to hold these events or to be discussed in these events is a fast and advantageous way to gain recognition, new prospects, and improved business. When corporations such as SBC take an interest in you, it means that you are on the right path, or at least, that you deserve the focus to help improve your actions, to rewrite that path.
The ideas spread over instances like SBC, allow for improvement in the industry, especially when focused discussions are promoted, bringing in experts in a variety of topics. For me, over the past few years, the summits have allowed me not just to get a glimpse of what is new, but also what has been successful in the past, which is just as important. Getting to know the faces that one has seen in interviews and expositions in the past is a great way to continue my interest in the industry. The mix of old faces and new talent is always great to witness.
iGX: What are the things you are looking to learn about at the conference this year?
AR: I believe that AI discussions and advances have been going on long enough to allow a very significant amount of providers to start creating their own AI improvements, so one of my main interests for this year’s conference, is to get to see firsthand which companies have taken the most advantage of such AI improvements and access. Not all of them have really achieved the amount of success that they proclaim, so one must be very clear about what´s being offered out there.
I am also interested in sportsbook technology developments, as well as esports activity updates, which are always exciting for me. In an environment not so easy to grasp and understand for me, SBC helps me to stay afloat.