The legal scenario of online gambling in Chile: risks, regulatory gaps and draft law
In many countries, online gambling is growing rapidly and moving large sums of money, thanks to more or less clear regulatory frameworks. However, in Chile, online gambling is not expressly regulated, so there are no rules that allow it to compete within the framework of the law. Indeed, in Chile we have Law 19.995 of 2004 which establishes the General Bases for the Authorisation, Operation and Supervision of Gaming Casinos, compliance with which is subject to the oversight of the Superintendence of Gaming Casinos (SCJ).
In practice, the online sports betting industry has proliferated internationally with large profits and million-dollar advertising contracts with players, leagues, and sports clubs. In the case of Chile, there have long been examples of online websites operating from abroad, and the bookmaker advertising business has also proliferated.
Under this scenario, we share with you this informative note, in which we analyse whether or not it is possible for the online gambling business to operate in Chile (despite the fact that it is not regulated). In addition, we analyse the draft law that is currently pending in the National Congress.
Current situation
In Chile, gambling is a regulated economic activity and, in principle, illegal in nature, which can only exceptionally and by virtue of an express legal authorisation be authorised for its development and commercial exploitation.
Currently, horse betting, the Lotería de Concepción, the Polla Chilena de Beneficencia, gambling casinos, bingos, as well as lotteries and similar draws for charitable or solidarity purposes are expressly authorised by law. Consequently, all bets or games of chance that do not fall within these categories lack legal authorisation and are therefore illegal.
In this sense, Law No. 19.995, which "Establishes the General Bases for the Authorisation, Operation and Control of Gaming Casinos", expressly provides in its article 5° that the games of chance regulated by said law and its regulations can only be authorised and developed in gaming casinos covered by the corresponding operating permit, adding categorically that "in no case shall the operating permit include online games of chance". In turn, in accordance with the above, article 3, letter b) of the same law establishes that only those games of chance that are expressly indicated in its catalogue and authorised by the legislator are licit.
It follows from the above that games of chance other than those expressly authorised could give rise to criminal liability, and could eventually give rise to any of the offences set out in articles 276, 277 and 278 of the Criminal Code, which punish infringements of the laws and regulations on lotteries, gaming houses and related activities.
From a civil perspective, Article 1466 of the Civil Code provides that "there is an illicit object in debts contracted by games of chance", which implies that legal acts derived from this type of activities are invalid, as they are affected by an illicit object.
This interpretation has been consistently upheld by the administrative authority and recently supported by case law. Indeed, the Superintendencia de Casinos de Juego, by means of Oficio Ordinario N° 1.456-2021, issued in the context of a complaint filed by Casinos Dreams S.A. regarding an agreement entered into between the Asociación Nacional de Fútbol Profesional and the company Betsson, held that online gambling platforms are not legally authorised to operate in Chile.
This thesis was also reaffirmed by the Supreme Court, which, ruling on an appeal filed by the Lotería de Concepción, ordered internet service providers to block access to certain online gambling websites, confirming that this type of activity is currently not legally authorised in the country. While the practical and immediate scope of such an order still generates debate, the ruling is a clear signal regarding the institutional position of the higher courts on the matter.
Online sports betting
Although there is no specific regulation governing online sports betting in Chile, in practice there are a significant number of foreign platforms that offer this type of services to users located in the country, without local authorisation or oversight. This situation generates various legal and practical risks, particularly for users, who participate in a market that lacks a legal protection framework at the national level.
These platforms are not licensed in Chile and, as discussed above, are not part of the gambling activities currently authorised by the current legislation. However, they are available to Chilean users and, in many cases, operate legally in other countries under specific regulatory regimes. Gambling is conducted entirely online, allowing for the deposit and withdrawal of funds through international payment methods, such as credit cards, bank transfers or electronic payment services.
Is it safe to gamble on such platforms?
From a legal point of view, caution should be exercised. Although many of these platforms enjoy a good reputation in the international market, the Chilean authority has not granted legal authorisation for their operation in the country, nor is there a system of supervision or protection applicable to local users. Consequently, a Chilean user who participates in betting through these sites does not have the same level of legal protection as a user resident in a country where online gambling is expressly regulated, as is the case, for example, in Spain.
In practical terms, this implies that, in the event of possible controversies or legal problems -such as fraud, breach of contract or payment disputes-, the Chilean user does not have a clear instance of resolution within the country, and must eventually resort to foreign mechanisms, with the costs and difficulties that this entails.
In addition, it is important to bear in mind that, as stated by the Internal Revenue Service, individuals who see their wealth increase as a result of winnings obtained through online gambling must declare such income in their annual income tax return, regardless of whether the platforms in question are not regulated in Chile.
Bill in the pipeline
Although Chile does not yet have a law specifically regulating online gambling, there has been significant progress in this direction in recent years. In particular, the bill that seeks to regulate the development of online gambling platforms, which was introduced in the Chamber of Deputies on 7 March 2022, is currently being processed.
Currently, the initiative is in its second constitutional procedure before the Senate, where it must be analysed, discussed and voted on before continuing its legislative process. In this context, the bill remains on the Senate's agenda as a priority, subject to the deadlines and procedures of this stage of the legislative process.
The purpose of the bill is to establish the conditions and requirements for the authorisation, operation, administration and control of platforms that allow online gambling, creating a specific regulatory framework for this activity. In this regard, the text expressly provides that any form of betting and gambling that is commercially exploited and that is not authorised or regulated by this or other laws will be considered prohibited.
One of the central axes of the initiative is the regulation of the so-called operating licence, understood as an administrative authorisation, subject to the rules of public law, granted by the competent authority to operate an online gambling platform in the country. Consequently, the bill establishes that obtaining such a licence will be an indispensable requirement to operate legally in Chile.
In this regard, the draft expressly contemplates a series of circumstances that may lead to the rejection of applications for an operating licence by the supervisory authority. These include not having offered - directly or as part of a business group - betting services, gambling, casinos or similar activities, online or through digital platforms, to persons within the national territory during the twelve months prior to the entry into force of the law. If this provision is maintained in the final text, it could imply that the authority rejects the application for a licence to operate in Chile of companies that maintain business links with entities that have previously provided this type of services to users located in the country.
Conclusions
In short, although a draft law aimed at regulating online gambling is currently pending, there is still no specific regulation in Chile that expressly addresses this activity. Current legislation regulates physical casinos, but does not directly address online gambling platforms, which generates a regulatory vacuum that impacts both users and operators.
From the perspective of natural persons, users in Chile can access and participate in international gambling platforms, but they must do so with caution, considering that they do not have a legal protection framework at the national level comparable to that existing in countries where this activity is regulated. In the absence of specific regulation, any disputes or conflicts arising from the use of these platforms have no clear means of resolution within the country.
For legal entities interested in operating an online gambling business in Chile in a legal manner, it is advisable to wait for the approval of the regulations currently in process before starting operations. This, insofar as the text of the bill itself contemplates grounds that could allow the authority to deny the operating licence to those companies that have previously offered this type of services to persons located in the national territory, which represents a relevant legal risk for those who anticipate the entry into force of the law.
