New Peru regulations explained
On 28 June, Peru’s president Dina Boluarte signed the country’s new gaming legislation into law. The law aimed to solve a number of problems with the previous legislation, Law No 31,557.
The law, which the previous president Pedro Castillo signed in August 2022, marked the long-awaited regulation of the country’s gaming sector. However, according to Felix, the law faced criticism from industry trade bodies for four principal failings. These were:
- The potential high cost of retail licences
- The lack of clarity on offshore tax
- The mandatory use of the .bet.pe domain
- Too short a time period outlined for the sector to adopt the law
Starting from scratch
As a result, the new version of the law took steps to rectify these failings.
The law itself resulted from of a robust set of discussions between multiple stakeholders, which included gaming trade associations, multiple government departments, trade unions and civil society.
Felix says that Peru’s gambling regulator – the Ministry of Foreign Trade and Tourism (MINCETUR) – also “called on all national and international stakeholders to review the document and deliver suggestions”, with the responses totalling more than 700.
“This was an unprecedented event in the history of public consultation, in terms of the preparation of the technical regulation of a law of the sector,” he says.
High cost of retail licences
Under Law No 31,557, operators looking to offer gambling in Peru were given two options for licences. Retail betting operators could apply for the first type of licence, with the second being an online-exclusive licence.
According to this initial law, a retail licence would cost Sol24,750 (£5,300/€6,300/$6,700) per shop. In comparison, the total cost for an online licence topped £215,000. The gaming sector objected to this because large retail betting operators in Peru would be expected to pay a much higher total licence fee than an online operator.
As a result, the new law eliminated the retail licence, instead creating a single online licence. Lawmakers decided to triple the cost for the new unified licence type to £645,000.
Felix says that in Peru, licence fees are not one-time costs. Rather, they are a bank letter guarantee presented to the government. The guarantee functions like a deposit.
This is meant to ensure operator compliance with the licence’s terms and conditions. The money will ultimately be returned to the operator if it chooses to exit the market.
Felix highlights that Peru’s gambling market – in line with Latin America as a whole – operates largely in an omnichannel fashion.
“We can conclude that in the next 10 years, this model will be maintained,” he says. “But sales could concentrate 85% on the online channel and 15% on the retail channel.”
Lack of clarity on tax
The industry had also voiced concerns regarding the lack of clarity on what tax burden offshore operators would face.
The original version of the law said that operators with a headquarters in Peru would face a 12% tax on revenue. However, it was not clear whether foreign operators would be subject to the same tax.
The new regulations aimed to clear up this ambiguity by establishing a single 12% point-of-consumption tax for all businesses offering their services in Peru, no matter where they were based.
Operators already active in the market also objected to the mandatory use of the .bet.pe domain address. Felix says they did so because this would have “commercially affected the change in domain of platforms that were in operation at the time”.
Consequently, the new regulations broaden the rules to allow authorised platforms to use any of the following domains – .bet.pe, .bet, .com.pe, .com or .pe.
Short period for adoption
The final reason Peru opted to change its gambling regulations concerned the length of time operators would have to acquaint themselves with the new law – 60 days.
Under the law, this deadline kicked in as soon as MINCETUR finalised the law’s technical regulations. Felix says this time period was “in practice, very short”.
The new rules subsequently included a provision doubling the adoption period to 120 days.
Other provisions of law
But the new legislation didn’t exist to solely fix past errors or controversies. New elements include a mandatory requirement for know-your-customer (KYC) checks on customers. Additionally, only licensed operators are permitted to sponsor sporting events or partner with athletes.
The law amends Peru’s criminal code and criminalises the act of conducting offshore gambling operations without a licence. This is punishable by up to four years in prison.
New horizons
According to Felix, the new rules – alongside the prospect of robust gaming regulation – are a positive development for the gaming sector in Peru.
“It put Peru in the global interest, as one of the seven attractive markets in the LatAm region along with Brazil, Mexico, Argentina, Colombia, Venezuela and Chile,” he says. “The maturity of the market is evident.
“We hope that this law will promote greater growth and consolidation of the Peruvian market in the coming years.”
For Felix, the well-thought-out nature of the new rules resulted from the government engaging many prominent stakeholders in the reform process.
“There was a broad and active participation in the discussion and debate of the draft amendment of this law and the technical regulations,” said Felix.
“The final result of this law reflects this hard work and participation.”