Gaming Taxation in Latin America: Experts Warn of Excessive Levies

Constitutional Limits on Taxing Power

The conference began with a reflection on the constitutional mechanisms that exist in various Latin American countries to protect businesses against potential excesses of taxing authority.

Tomás García Botta, from MF Estudio, explained that Argentina has constitutional guarantees that limit state action, though he warned that their practical application often proves costly.

“There is a legal level and a practical level. Constitutional guarantees exist to protect private activity against the state’s taxing power, but many times the cost of enforcing them is a major disincentive.”

He noted that in many Argentine provinces, to challenge a tax claim one must first pay the disputed tax, immobilizing significant resources for years while the judicial process unfolds.

Chile: Concerns Over Excessive Tax Burden

A project that could affect channelization 

Carlos Baeza, of Baeza & Cía., described the Chilean scenario, where the online gaming regulation project has been under discussion since 2022.

He explained that the proposal currently contemplates a tax burden of around 37.6%, far higher than in other regulated Latin American markets.

“That percentage is an absolute absurdity considering the objectives that any regulation seeks.”

Baeza reminded that regulation pursues two fundamental goals:

• Protect as many users as possible
• Maximize tax revenue

He argued that both goals become difficult to achieve when the tax burden is too high.

Peru and Constitutional Guarantees

Moderator Carlos Fonseca reviewed several Peruvian constitutional principles that limit taxing power, such as the rule of law, equality, and the prohibition of confiscatory taxes.

He recalled that Peru’s Constitutional Court once struck down a 20% tax on gross casino and slot revenues, ruling it confiscatory. He also noted that certain aspects of the current Selective Consumption Tax applied to online gaming could raise new constitutional challenges.

Can VAT Apply to Gaming?

A legal debate on the nature of the activity 

One of the most technical moments of the conference focused on whether gaming could be subject to Value Added Tax (VAT).

Carlos Baeza argued that conceptually, gaming should not be taxed under VAT.

“From a conceptual standpoint, VAT should not apply to the industry.”

He explained that gaming platforms do not sell goods or provide services in the traditional sense, but rather facilitate contracts of a random nature. He criticized the inclusion of VAT in Chile’s draft bill.

“Very few countries include VAT in gaming taxation, and it is clear that those who do achieve poor results in both revenue and channelization.”

Tomás García Botta offered a more nuanced view, noting that certain activities — such as peer-to-peer poker tournaments organized by an operator — could indeed constitute a true service.

“In the case of random contracts, they clearly fall outside VAT’s scope, except for some specific cases.”

High Taxes: More Illegal Market, Less Revenue

The Laffer Curve applied to gaming in Latin America 

Much of the debate centered on the relationship between tax pressure and market channelization.

Carlos Baeza recalled that international evidence shows an inverse relationship between the two.

“The higher the tax burden, the lower the channelization rate.”

He cited a study by Copenhagen Economics during Sweden’s regulatory process, which found the optimal tax burden for the gaming industry to be between 15% and 20%.

“If the goal is to collect more and protect more users, the tax burden must be reasonable.”

Bolivia and Other Latin American Examples

Carlos Fonseca used Bolivia to illustrate how excessive taxation can prevent the development of a regulated market.

He noted that Bolivia has had a legal framework for online gaming for years, but no licensed operators exist due to the high tax levels.

“You cannot prevent this activity from existing. The responsible approach is to regulate it responsibly.”

Fonseca also mentioned recent tax debates in Colombia and Brazil as examples of a regional trend toward increasing fiscal pressure on the sector.

Lack of Knowledge and Historical Prejudices

Toward the end of the panel, experts agreed that many regulatory decisions stem more from ignorance than from technical analysis.

Tomás García Botta argued that much of the problem arises from limited understanding of how the industry works.

“I believe the main driver is lack of knowledge.”

He added that the industry itself suffers from a communication deficit.

“The gaming industry generates thousands of jobs and millions in tax revenue, but it often remains one of the easiest targets when governments need resources.”

For the Argentine lawyer, academic initiatives and debate spaces like those organized during the Peru Gaming Show are essential to provide technical information to both legislators and society.

An Industry Calling for Evidence-Based Policies in Latin America

In conclusion, panelists agreed that international experience shows balanced tax policy simultaneously promotes market formalization, player protection, and increased fiscal revenue.

Despite the legal differences among Latin American countries, the consensus was clear: excessive taxes weaken the regulated market, strengthen illegal offerings, and undermine the very objectives pursued by states.

The panel’s main takeaway was that the future of gaming regulation in Latin America will depend on fiscal policies grounded in evidence rather than historical prejudices.

Watch the full conference on our YouTube channel.