Without a doubt, the approval of the Law that regulates the exploitation of remote games and sports betting is good news, on July 15 the congress of the republic with a majority vote approved the bill, and last Friday, August 12, in a special ceremony the President of the Republic Pedro Castillo signed Law No. 31557 that formalizes and promulgates it. Three presidents and three congresses passed since 2018 when the general direction of casino games and slot machines of the Ministry of Foreign Trade and Tourism (MINCETUR) formally presented the initiative of the draft regulation, after four years finally the approval was achieved and make the law official in a joint work and consensus between the legislative and executive power for the benefit of the country and the gaming industry of chance.
This law consists of 63 articles that from our point of view and opinion give a legal, administrative and tax framework that favors and encourages the development of the Peruvian market and international investments of multinational companies and investors in general. The law has established as regulator of the activity the Ministry of Foreign Trade and Tourism (MINCETUR) being the General Directorate of Casino Games and Slot Machines in charge of executing this role.
We consider that this law favors the development of the Peruvian market because in Article 7 that refers to the Authorization of Exploitation of technological platforms that include companies incorporated in the country, but also foreign companies domiciled abroad, as well as in Chapter X and the articles referred to the obligation to pay taxes, the complementary and amending provisions, the creation of the obligation, subject to the tax, and Chapter IV referring to the control and payment methods refer to and it is understood that the payment obligation begins from the moment the first bet ticket is sold; in that sense and knowing the level of professionalism and supervision of the Peruvian tax agency (SUNAT) it is difficult to think that any company stops paying in addition to the exploitation rights other taxes such as income because it would be providing a technological service within the Peruvian territory, on the other hand we consider that in the case of any tax gap this would be corrected through a Supreme Decree of this agency, in that sense we consider that this point will be detailed in the technical regulation that the regulator has as its task to develop and present in the next four months; Finally, in this tax matter, the tax agency has sufficient powers to issue the rules and complementary provisions.
Article 8 refers to the Authorization and Registration (Homologation) to which technological platforms, games, progressive systems, all game components, payment method gateways, among others, must submit. Likewise, according to this law, it is evident that in the process of requesting operating authorizations, each company will be subject to a rigorous due diligence process, KYC, AML in accordance with the laws of prevention of money laundering and financing of terrorism in force in the country, with the participation of the Financial Intelligence Unit (UIF) and the Superintendency of Banking and Insurance (SBS); After passing and approving this rigorous procedure, the companies will obtain the authorization (ONLINE license) for six years, they will also have to pay a guarantee equivalent to 200 UIT (Tax Units. 01 UIT = S /. 4,600) which is equivalent to US $ 240,000 US dollars. This guarantee can be presented through a bond letter, bank deposit or a surety policy, and must be renewed every year for the period of the authorization.
The authorization also includes face-to-face betting agencies (Retail channel) that may be linked to the same holder of the ONLINE license or to another related legal entity. The law has fixed the payment for each betting agency with a guarantee of 5 UIT equivalent to US $ 6,000 US dollars. In the same way as the ONLINE license, this guarantee can be presented through a bond letter, bank deposit or a surety policy, and must be renewed every year for the period of the authorization. In our opinion we consider that this is the main point that has generated the discomfort and opposition to this law, since it could constitute a high financial budget for some local companies, taking into account that the total budget of the payment of this guarantee is a function of the number of agencies that are defined to keep in the market. However, in this new scenario we consider that it will be necessary to restructure the business plan and commercial strategy of each operation focused on developing and further empowering the online channel in the coming years, maintaining a strategic presence of the retail channel in the country.
The law also includes certification laboratories, which in addition to going through the registration and accreditation process before the regulator must pay a guarantee of 100 UIT equivalent to US $ 120,000 US dollars, which must be renewed each year.
Regarding the tax for exploitation right, the law has set it at 12% per month on the NET WIN, it also considers 2% deductible expense for technological maintenance of the platforms. The payment of this monthly tax by companies operating within the country is considered as a deductible expense for the purposes of calculating the payment of the annual income tax payment. The regulator and related government institutions such as the tax agency (SUNAT), Financial Intelligence Unit (UIF), Superintendency of Banking and Insurance (SBS), the National Institute for the Defense and Protection of Intellectual Property (INDECOPI) and the National Police will develop a joint role of supervising the activity according to the competences of their functions and the provisions of this law. For example, the law states that as part of the tax audit and audit functions the tax agency (SUNAT) must have access to each operator's player databases and transaction records. The regulator within its competences must proceed to block and report to the competent authority all platforms and applications that do not have authorization and continue to operate illegally when the law comes into force.
Regarding the technological aspects, the law has established that hosting, servers and databases can be located in suitable computer centers and in accordance with the rules established for these within the country or abroad, the operator must guarantee and provide the access required for the supervision and audit functions of the regulator and the tax agency mainly.
On the client side, the law has established that there will be no more players and anonymous bets, so each operator through the platforms must formally comply with the registration and identification of players who must prove to be of legal age, identify if they are Peruvian or foreign, payment methods, bets, prizes among others. It has also established that the payment methods to be used will be all those allowed by law (cash, debit and credit cards, bank transfers, others) except for cryptocurrencies that are prohibited.
The regulator still has on its agenda to prepare and present the technical regulations of this law, which must be approved and published through the official newspaper El Peruno within a maximum period of four months from the signing of the law by the president of the republic. It is at this stage that we suggest to the government and the regulator that it convene companies, entrepreneurs and specialized consultants at home and abroad to listen and receive the contributions of each one and facilitate the elaboration of a very complete technical regulation.
After the approval of the technical regulation, the law will enter into force after 2 months, so according to the established period the law would enter into force in March 2023, the date from which the Peruvian state will receive the income from exploitation rights of this activity and will distribute it as follows: 20% income to the public treasury, 20% will be transferred to the Ministry of Health for the Mental Health program, 40% income for MINCETUR (25% will be allocated for tasks of control and supervision of the activity; 75% will be allocated for the promotion and development of tourism), finally 20% will be transferred to the Peruvian Institute of Sport (IPD) for the promotion and massification of sport at the national level. According to the calculations of the government with the regulation of this activity it is expected to raise 160 million soles (40 million dollars average) which is an important figure, however from our analysis and knowledge of the development potential of the Peruvian market we consider that the collection figure could be higher every year to consolidate the maturation of the same and the entry of new operators, we must take into account the process of maturation and growth of the Colombian market, the first growth figures of the Argentine market.
There is a long way to go as it has been the turn of countries such as Colombia, Now Argentina and Panama but it is very important and decisive the step that Peru has taken to regulate the market, we are optimistic, we will carry out the permanent monitoring and with the willingness to provide our contribution to the sector next to the regulator as we have done before with regulators such as Coljuegos, and accompanying local and international companies in business development this time in a regulated market.
Jonathan Daniel Felix Vilchez
CEO of Global Business Company
https://www.gamesbras.com/english-version/2022/8/25/keys-to-the-regulation-of-sports-betting-and-online-gaming-approved-in-peru-32402.html