Peru primed and ready for takeoff

The value of remote sports betting and gaming activity in Peru is estimated by the government at around US$ 1,000 million. This is despite the sector being unregulated in the county a factor which helps to explain the law recently approved by the Congress of Peru. The government is hoping it will add another source of income to the national treasury, one that will continue to grow as the activity itself grows. Like their Latin American neighbors, Peruvians identify with soccer and other sports. Sports betting is already popular in the country and it is this segment that is likely to have the greatest attraction for the players.

In July 2022, Congress approved a Law that regulates remote gambling and remote sports betting. In August it was published in the Official Gazette El Peruano paving the way for it to become law. The new law intends to formalize a market that currently operates in a gray zone. One of its purposes is to ensure that the operation of remote gaming and remote sports betting is conducted with integrity, honesty, transparency and equal treatment. It seeks to protect vulnerable sectors of the population through access controls for minors and execution of responsible gaming policies aimed at preventing development of addictive behaviors. It has provisions to prevent remote gaming and remote sports betting from being exploited by criminals for money laundering, the financing of terrorism or the commission of fraud, information technology crimes and any other illicit purposes. Although this is a landmark moment, players will not necessarily be affected or see any change as a result of the new law. They will continue to place their bets as they are currently doing. The difference is that they will no longer be able to continue betting on unauthorized websites.

 

Law TO create a regulated market

Despite certain inconsistencies in the Law under comment, this is a long anticipated moment and occurs after no fewer than five previous bills presented by different congressmen and others in the Executive Branch. It implies the beginning of the regulation of a sector that will generate a considerable number of jobs. It makes possible a generous revenue stream for the State and promotes an activity that needs to be regulated given its particular characteristics.
By taking this first step, Peru has put itself on an equal footing with other countries in the region and the world. It now has a regulatory regime to attract domestic and foreign investors wishing to expand their operations in fully regulated markets. It will give them confidence they are doing so under a stable regulatory framework with the necessary legal safeguards.
The regulations will be applied and overseen by MINCETUR, the Ministry of trade and foreign affairs of the Peruvian State and the promotion of tourism in Peru. MINCETUR is one of the most respected ministries in Peru with extensive experience in regulating games of chance and betting. It has been the competent authority authorizing the operation of casinos and slot parlors in the country. It has several decades of regulatory experience and is a solid entity with respect for procedure.

 

Provisions of the new law

This does not mean that the rules, and especially the ones under comment, do not require certain adjustments to achieve the desired objectives. In this brief report we will comment on the main points of the Bill and highlight some that require modification:

l . The regulation states that legal entities incorporated in Peru and branches established in Peru may request an authorization for the exploitation of technological platforms for remote games or remote sports betting. However, it also provides for persons incorporated abroad who may request an authorization for the exploitation in Peru of technological platforms of remote games and/ or remote sports betting.

2. Authorizations are granted independently and are valid for a term of six calendar years, and renewable for the same period. These authorizations are individual and non-transferable and are obtained based on technical, legal, economic, financial and background reports.

3. Exploitation of the platforms must be carried out using a web domain authorized with the extension bet.pe. on platforms authorized by MINCETUR.

4. The technological platforms of remote games or remote sports betting, gaming programs, progressive systems, payment gateways and main components and / or services, will be subject to authorization and registration (homologation) in accordance with requirements and conditions to be established in the regulations, and must have a Certificate of Compliance issued by one of the authorized certification laboratories.

5. Authorizations and registrations granted to platforms will be valid for a term of two years and renewable for the same period. Game programs, progressive systems, payment gateways and main components and / or services will have an indeterminate term of validity.

6. The operation of remote sports betting and gambling will be authorized to legal persons constituted in Peru, without prejudice as to whether it is the same legal person holding the authorization of a technological platform, or another related legal entity. The authorization is granted in respect of an authorized and registered platform, if it has previously been the subject of an operating authorization granted by MINCETUR.

7. The valid term of these operations is limited to the exploitation term of the technological platform of remote sports betting and is granted with respect to a gaming room and a technological platform.

8. Chapter II of the Law regulates issues related to the verification of player status, betting, progressive systems, bonuses, means of play and payment.

9. A player is defined as a natural person of legal age, of Peruvian or foreign nationality resident in the country registered on the technological platforms of remote games or remote sports betting. In the case of foreigners, the player must have residency status in the country in accordance with migration rules.

10. In relation to bets, their acceptance, modalities or types is regulated, along with the conditions in the case of the technological platforms for remote games. Only those games authorized and registered by MINCETUR and only sporting events that are part of a national or international sports federation or league can be subject to a bet.

11. In relation to progressive systems, the rule states that the prizes charged to these systems cannot exceed 60 percent of the amount of the guarantee that is due to them.

12. The means of play can be via personal computers, mobile phones, and any other personal electronic devices through which players can interact with the technological platform. Betting terminals can be installed only in remote sports betting rooms operating under the authorization of MINCETUR.

13. The method of payment of bets or prizes will be through money in circulation, credit cards, debit cards or any other means of payment accepted by the holder, with the exception of cryptocurrencies. Payment accepted by the holder must be unique to each player and prize payouts must be given only to the player who placed the bet and verified the winning play.

14. Welcome bonuses or similar are permissible provided they cannot be exchanged for money. The holder must consider that once the bet has been placed using a bonus, said bet constitutes income for corresponding tax purposes.

15. Chapter IV regulates databases. The physical location of servers may be outside Peru but the holders of an authorization must have certifications issued by an authorized laboratory which confirm compliance with technical conditions established in the law and the regulations for the installation and operation of the servers in which the platforms are recorded.

16. Point 21.1 contains an important clause concerning access to the players’ database. This paragraph states that the authorized holders will provide directly or through third parties necessary access to MINCETUR and tax ministry, SUNAT, that allows the latter to obtain information on operations carried out by players registered on the platforms.

17. Regarding guarantees to be provided in support of obligations and sanctions, holders of an authorization for the exploitation of the technological platforms of remote games or remote sports betting will grant a guarantee in favor of MINCETUR with the following characteristics:

a) A separate authorization is required for the operation of each platform and for each remote sports betting gambling room subject to authorization.
b) The guarantee is binding, irrevocable, unconditional, and automatically realized in the form of a bank deposit, bank deposit letter or a surety policy
c) The term of the guarantee is one calendar year renewable for the same period
d) The amount of the guarantee is equivalent to 200 Tax Units and five Tax Units for each remote sports betting game room. ITU today: 5/. 4,600.00.
e) This guarantee will be increased in proportion to the increase in net income generated annually by the holders.
18. The following chapter contains the obligations and prohibitions of the holders of an authorisation to operate the platforms. The following are among the most important
obligations. Holders must:
a) Maintain an account opened in a financial or banking institution under the supervision of the Superintendency of Banking and Insurance of Peru (SBS) in which deposits are exclusively found for bets made by players. It is the authorized platform holder’s responsibility to guarantee the intangibility of deposits as long as the result of the bets made is not known. The holder is also responsible for the cost of opening and maintaining the account, as well as the payment of the taxes levied on the movements of the deposits made.
b) Exploit the platforms through a domain with the extension: “bet.pe”.
c) Guarantee that the service providers of the platforms provide MINCETUR and / or SUNAT with the necessary information and access, in the procedures of control of the platforms.
The following are among the most important obligations. Holders must not:
a) Allow minors onto the platforms, or direct messages to the underage population through real or virtual representations of them.
b) Transfer under any modality, in whole or in part, the authorization of exploitation of the platforms granted by MINCETUR.
c) Allow money obtained as a prize or bonus to be used to make new bets that are not part of the taxable base of the Gaming Tax.
d) Allow, among others, people registered in the Registry of Persons Prohibited from Accessing Establishments Destined to the Exploitation of Casino Games and Slot Machines, in charge of the Director of Casino Games and Slot Machines dependent on MINCETUR.
e) Locate Remote sports betting gambling halls within 150m meters, following the minimum pedestrian route, of temples, or education centers where regular basic education is provided.

19. Advertising of platforms that are not authorized by MINCETUR is prohibited. Authorized platforms may sponsor companies, individuals, events, or activities of any nature, to the extent that the sponsorship does not violate current legislation.

20. The law establishes a Regime of Infractions and Sanctions, corrective and precautionary measures among which will comprise reprimands, fines of 1 to 200 UIT, cancellation of authorization, disqualification for up to ten years, permanent disqualification and corrective measures such as the temporary closure of an establishment, temporary suspension of activities, permanent closure of an establishment, confiscation of assets, immobilization of assets, blocking of IP addresses, URLs, WEB pages and / or computer applications which may also be carried out as temporary measures to ensure the effectiveness of the final resolutions of any sanctioning procedure. The detail of the punishable infractions is incorporated in Article 38 which all the people involved in the operation of the platforms should familiarize themselves with.

21. The Bill creates a Tax on Remote Games and Remote Sports Betting. This will be paid monthly and applies equally to legal persons constituted in Peru and the branches of legal entities constituted abroad for both remote games and remote sports betting.

22. To determine the taxable base, gross monthly income will be the total amount of bets received in the month through the money or monetary value of bonuses and other concepts paid by the players in favor of the platform. Monthly net income is equal to the difference between the gross monthly income received in a month and the total amount of returns and prizes paid out in the same month. The tax base is constituted by the monthly net income minus the maintenance expenses of the platform (2%).

23. The tax base is determined independently by each platform according to the accounting information recorded in the database of the platforms’ servers. The taxable rate is 12% and will be administered by SUNAT.

24. The tax paid by platforms domiciled in the country constitutes a deductible expense for the purposes of determining Income Tax.

25. Finally, the supplementary provisions contain the following points of interest:

25.1 The law will come into force sixty days after the date of publication in the Official Gazette El Peruano of the Supreme Decree approving its Regulations.
25.2 By Supreme Decree, MINCETUR shall regulate the law within a period that must not exceed 120 business days from the date of publication of the law in El Peruano.
25.3 Municipalities may grant operating licenses only to holders of platform operating authorizations or to holders of remote sports betting game rooms granted by MINCETUR.

26. The amending complementary provisions incorporate changes in the Law on General Sales Tax and Selective Consumption Tax incorporating as subjects the holders of an authorization for the exploitation of technological platforms of remote games or remote sports betting granted by the competent authority, among other additions such as the creation of the tax obligation, the systems of application of the tax, the concepts included in the tax base, etc.

27. We will need to wait for the regulations that will clarify most of the inconsistences in the law.

 

Conclusions

International operators already active in Peru and who wish to continue operating in the country should already be approaching the requirements that the law establishes. The law is now clear enough as to the consequences for operators not having the authorizations and respective licenses, for example, the blocking of web pages. Although the law has not yet fully entered into force because it needs the regulation, the government can publish it at any moment and this should be anticipated by international operators who will require time to set up companies, grant powers of attorney, apply for authorizations, licenses, certifications, etc., work that requires planning.
The law is positive in that it allows operators to formalize and work within a regulatory framework that will provide legal security. There are some inconsistencies, particularly in connection with tax. In this case, the law has contemplated the taxpayers for the payment of taxes only to companies that operate within the country and to branches of foreign companies but has not referred to offshore companies. This will no doubt be corrected so that all operators compete on an equal basis.