Chile is going through a situation that maintains international attention and concern due to the outbreak of the social and economic crisis that occurred more than two years ago, and has forced the state to address the demands of the population, who today seek the change of constitution with the interest focused on the reform and necessary adjustments in economic and social policies that promote the development and well-being of the vast majority. The political agenda and interest of the entire country is focused on this constitutional reform that should generate a major change in this country, and will undoubtedly set a precedent throughout the region.
In the gaming sector, and this year in particular we are witnessing the actions deployed by the main economic groups that maintain the monopoly of the exploitation of physical casino games against sports betting, online gambling and the exploitation that to date has been developing in this country. From my point of view these actions, and the arguments presented demonstrate the interest of these economic groups in maintaining the monopoly in this industry with the clear intention of also taking over the potential market of sports betting and online gambling that continues to grow.
The government has undertaken a harsh campaign from various institutions against sports betting, online gambling and against the current companies that are operating in the market. In this line the congress of the republic has been discussing bills that seek to regulate sports betting and online games, likewise another bill aims to prohibit the advertising of sportsbooks in the media in general, another bill seeks to prohibit the sponsorship of bookmakers in professional football clubs of the local tournament, and in this same line other actions that seek to prohibit and penalize this activity in the country. At the same time, the municipalities of various regions of the country have also undertaken a series of control actions to close the casino and betting rooms without a patent (license) that in recent years have been opened throughout the country driven mainly by the market demand and CODIV-19 pandemic.
From my point of view there is a legal vacuum that favors the exploitation of sports betting and online gambling, but before going in the same line of other actors and interest that we mentioned above that seek to combat illegality, prohibit the activity, implement a series of restrictions, and at the same time propose a model of regulation, it is necessary to look cold at this phenomenon that continues to grow to analyze it and propose from it the most convenient actions that allow generating the development of the iGaming sector and the market in the coming years.
I share the following points that I consider key to start the analysis of the market and the opportunity it represents.
First: the proliferation of gambling and betting houses throughout the country reveals the existence of a segment of the population and market neglected for years due to current laws and regulations, which from my point of view need to be reviewed and updated to meet this unmet and unattended demand.
Second: internet penetration and financial inclusion. In LATAM Chile is one of the countries that leads in internet penetration with more than 90% of the population with Internet access, it was also the first country that deployed 5G telecommunications networks and today there are more than 25 million mobile phone connections throughout the country. In the financial sector, Chile leads financial inclusion in LATAM with more than 51% penetration, being in second place after Panama, which leads the growth with more than 52%. In the case of Chile in the banking sector currently more than 13 million Chileans have a savings account and more than 80% of this banked segment has a debit card.
Third: the potential market and the profile of the current player. Apparently to date in the growth of sports betting and online gaming the estimated annual sale may be above 700 million dollars with a projection of growth of more than 2 billion dollars in the coming years only in this sector. The current player uses the coverage of mobile networks and available technology to access the gaming platforms and place bets on the sporting events of their interest, spend periods of time connected to these platforms enjoying the portfolio of entertainment and betting they offer. In the case of land-based casino and online casino games, the player in this segment is not willing to travel hundreds of kilometers to the nearest casino complex for reasons of time, ease of access and budget at their fingertips, so an important segment goes to the in-person gambling and betting rooms that are closest to their location. This is an important point that must be taken into account in regulatory bills.
Fourth: Government policies are not in tune with what the market needs to drive its development. As mentioned above, the approach of the congress is mainly based on prohibiting, restricting and penalizing the exploitation of sports betting and online games in general without taking into account that these actions produce the opposite effect, in which the market opportunity, the need of the players and of course the offer of the companies and platforms will always find a way to continue operating favoring the increase of illegal activity. Added to this is the lack of a law that comprehensively addresses the problem and the current opportunity and that allows the opening of the market to national and international investors, favoring the development and growth of the sector in the coming years.
Fifth: discouragement of international investment and economic losses. Prohibiting the activity will only generate the loss of the investments executed to date in various sectors related to sports betting mainly as is the case of professional football clubs that received significant income from sponsorship contracts and that are necessary in the competitive and financial plan to sustain and maintain the local championship, the suspension of investment in advertising will also affect the economy and business plan of multiple private companies closely related to sports betting and online gaming, they could also generate the loss of direct and indirect jobs that to date have been generated due to the operation of various national and international companies, and last but not least, it will generate a negative impact at the international level discouraging the investments of important companies and investors with interest in various countries of the region, including Chile, which until today is considered a potential and attractive market.
The Chilean market has all the necessary conditions so that from a successful regulation the successful development and growth is achieved, exceeding the expectations and preliminary projections that may be made in the first years, as the Colombian market has demonstrated.
As I mentioned at the beginning of this note, the political agenda today is focused on achieving the change of constitution, however I consider it opportune and necessary to include in the agenda the regulation of sports betting and online games allowing the opening of the market and the consolidation of it in order to prevent the current activity from continuing to grow and become uncontrollable in the coming years.
Jonathan Daniel Felix Vilchez
International executive with over 20 years of experience in the gambling industry in Latin America. He has been part of the staff of international companies with operations in Peru. In addition, he has advised international companies based in the United States, Europe and Asia for the development of businesses and projects in the Latin American region. He is CEO of Global Business Company de Perú S.A.C. https://globalbusinesslatam.com/ , a company based in Peru, specialized in consulting and business development in the sector of gambling, financial services and value added.
