Peru’s Betting Boom at Risk: 1% Tax Proposal Sparks Industry Concerns
Peru’s gambling industry, once poised to become South America’s third-largest online betting market, faces potential setbacks as the government reintroduces a 1% consumption tax on wagers. This move, outlined in Legislative Decree 1644, has raised concerns among operators about increased costs, double taxation, and a possible resurgence of unregulated gambling.
The country had made significant strides in 2023 with the implementation of Law No. 31557, which regulated online sports betting and gaming. Operators welcomed a 12% tax on gross gaming revenue (GGR), deeming it competitive and conducive to growth. By March 2023, over 145 license applications had been submitted to Peru’s Ministry of Foreign Trade and Tourism (Mincetur), reflecting strong interest from major operators like Betsson and Rush Street Interactive.
However, the proposed consumption tax on the value of every bet threatens to derail this momentum. Industry insiders, including Gonzalo Perez, CEO of Apuesta Total, argue that the new levy would effectively double the tax burden for operators. “The 1% rate on turnover is excessive and demonstrates a lack of understanding of our sector,” Perez remarked.
Concerns Over Regulatory Impact
One major worry is that the tax could lead to a resurgence of illegal gambling. Peru’s robust regulatory framework has been lauded as one of Latin America’s strongest, but industry leaders fear the tax could push operators and consumers toward the black market.
Legal expert Nicolás Samohod Rivarola highlighted the risk, stating, “The additional tax burden could make the legal market unattractive, driving players and operators to unregulated platforms.”
Another concern lies in the ambiguity of the tax’s application. Some believe it may target only foreign operators, raising equity issues for local companies.
Industry Divided on Impact
While some operators, like Perez, view the tax as a potential “nightmare” that could lead to job cuts and reduced competition, others see it as an opportunity. Zoran Milosevic, CEO of Meridianbet, expressed optimism, suggesting that tighter regulations could ultimately benefit compliant operators by reducing competition.
Milosevic noted, “This is something we’ve seen in Europe. Higher taxes often result in fewer competitors. In Peru, we could see the number of active operators drop significantly.”
Looking Ahead
The government expects to generate around Sol110 million annually from the tax, but its implementation timeline remains uncertain. Perez suggests that the necessary adjustments to platforms and systems could delay enactment until at least early 2025.
Despite these challenges, Mincetur has limited influence over tax legislation, leaving operators to adapt to the new reality. Industry leaders are urging the government to clarify regulations and ensure fair application of the tax to all market participants.
As Peru’s betting market navigates this pivotal moment, the outcome could determine whether the country solidifies its position as a regional leader or faces setbacks from an invigorated black market.
