Latin America: proceed with caution

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Lorien Pilling, director of Global Betting and Gaming Consultants (GBGC), suggests that emerging Latin American jurisdictions such as Brazil could still be an uncertain bet for gaming operators looking to set up shop there.

The reports from Brazil before Christmas that legislation to regulate gambling was finally going to be passed, after an earlier presidential veto, was a welcome gift for the gambling sector to take into the new year. But there are nume
rous examples from the South American continent to suggest that operators should proceed with caution.

Indeed, Brazil itself provides its own cautionary tale. In the 1920s and 30s Brazil did have a thriving and glamorous casino sector but this was brought to an abrupt end in 1946 by President Eurico Dutra who outlawed virtually all gambling in the country. It has taken 70 years and a severe economic crisis to reverse that decision.

One of the concerns for gambling in South America is the rule of law and whether any regulation is worth the paper on which it is written. Operators in Venezuela and Ecuador know this to their cost. In the mid-1990s casinos were permitted in Venezuela for the purpose of stimulating tourism. But just as the licences were being issued, socialist leader Hugo Chavez came to power and everything changed. Chavez was opposed to casinos and taxed them to the point of bankruptcy. Throughout his presidency casinos and bingo halls were targeted for closuimage82b_BBi136re or non-renewal of licences.

Ecuador’s casinos suffered a similar fate in 2011. The year before, President Correa had begun a campaign to make his country “gambling free” and in May 2011 a public referendum voted in favour of gambling prohibition. Casinos were given six months to close their doors.

It is not just the land-based gambling sector that has been burnt in South America. Between 2006 and 2009 several European online gambling firms took licences in the Argentine province of Misiones and began advertising their services in the country. But in 2008 judges in Buenos Aires ruled that the city’s residents were not permitted to play on the websites because the Misiones licence did not have jurisdiction outside that province. Buenos Aires is the real market in Argentina, so without access to it the operators closed their locally-licensed Argentine websites.

As well as the regulatory uncertainty, there is the economic fragility of some countries in South America. Research published in the Economist in July 2014 showed that since 1800 nine of the top 10 countries to default on their sovereign debt are from South America. Brazil has defaulted nine times since 1800 although has not done so this century. Does that mean a new stability has entered the Brazilian economy or, rather like a volcano, that a major eruption is due?

The Brazilian gambling market, with a population of more than 200 million, is clearly attractive. But the political and economic history of the region shows that the winners and losers in this market will not just be confined to the players on the gaming tables.


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