Chile will become the country with the highest tax burden in the world for online platforms, which implies a strong disincentive not to regularise. This was the diagnosis made by Carlos Baeza, the representative to Congress of Betson, Coolbet, Betano and Latamwin, on the indications that the Ministry of Finance introduced a fortnight ago with which it seeks to regulate the industry.

This is the first time that Gabriel Boric's government has sent amendments to the bill that was introduced by the last administration, which, according to the lawyer, are such profound changes that one could speak of a new initiative that is very different from the one that Piñera introduced just days before the end of his term in office.

"Chile automatically becomes a very unattractive country for prestigious online operators to set up in. And it pushes the illegal market to grow".

What is your analysis of the government's amendments?

No article of the original bill was spared from the amendments made by the Ministry of Finance. By far the most worrying of all is that VAT was added to the tax burden, which is very bad news. If you add the Gaming Tax plus VAT, the tax burden stands at 38.2%, making us the country with the highest rates in the world. The most successful tax burden is between 12% and 15%, because they are attractive for the growth of the industry. Before the Government's indications, the project foresaw a Gaming Tax of 20%, added to the 1% tax for responsible gambling, and another 2% levy for sports federations, we were already at 23%, which was already high.

What are the consequences of this decision?

There are several reasons that make this news very negative. The biggest problem is that the collection target is not met, because if you look at the channelling (number of players moving from the unregulated to the regulated market) they are inversely proportional. For example, Cyprus has the lowest rate of Gaming Tax (12%) and has one of the highest channelling (85%). While France, which has one of the highest taxes (35%), has a very low channel (45%), because more than half of the players prefer to gamble on unregulated platforms.

If we have the highest tax burden in the world, the collection objectives are lost because it is a disincentive to regularise. And this is also a very bad signal for users, because having a low channelling means that many will be unprotected. The idea of good regularisation is to aim to have as many people as possible playing on registered online platforms, which will be obliged to comply with standards and guarantees.

Chile is one of the only countries that adds VAT, in addition to the Gaming Tax. Why do you think this route was taken?

It is difficult to know the reasons, but there are two that one could imagine. The first is to increase revenue, but by applying a misconception. Raising the tax on online gambling does not result in increased revenue. Perhaps in other sectors it might work, but here it affects negatively. In fact, it will do the opposite. The Superintendence of Casinos and Gaming (SCJ) in January indicated that through this industry could obtain US$ 140 million in revenue for the Treasury. If this indication is approved, we will not collect US$ 280 million; in fact, I think it will be even half of what the regulator estimated at the beginning because of the low channelling rate.

Secondly, I think they tried to equate the logic of taxing online gambling with land-based casinos, but we are not the same. The Ministry of Finance itself has acknowledged that we are different industries and even the Chilean Association of Gaming Casinos (ACCJ) implied it in the interview to Diario Financiero a few days ago.

And what effect can it have on the online industry?

Clearly Chile automatically becomes a very unattractive country for prestigious online operators to come and set up shop. And it pushes up the illegal market, because those companies that don't pay tax will be bombarding users to capture demand at a lower cost. The number of indications made by the Treasury would merit hearing experts again because it is practically a new project. A new analysis is needed.

What other indications are of concern?

There are other important issues, though not as important as the VAT tax that steals the whole movie. For example, it makes no sense to have a tax of 0.07 UTM (equivalent to $4,500) every time the user subscribes. It has no impact on revenue and is a barrier to entry. It is an attempt to put it on a par with physical casinos, but it does not make sense.

From a technical point of view, we are also concerned about the project that regulates the mechanism of delivery of vouchers to play of the operators, forcing not to put restrictions on use. In other words, we can transfer money, but without conditions (such as date of use or where it can be spent); therefore, you give money without restriction, which may not be spent forever in the user's account.