Chile and India Make Strides in Online Gambling Regulation

The past week witnessed important developments in online gambling regulation, with jurisdictions like Chile and India striding toward formalizing rules for online gaming platforms.

Chile and India Advances Online Gambling Regulation

On August 7, Chile’s Senate Finance Committee unanimously approved a bill which mandates regulating online gambling. The proposal now heads to the full Senate for a vote. If passed, it will move into a new phase for proposed amendments and further review by the Economy and Finance Committees.

Originally cleared by the Chamber of Deputies in December 2023, the bill has undergone extensive review by technical and legislative committees. The goal of the bill is to ensure player protection, especially for minors, and promote transparency and competition within the gambling industry. As per reports, the bill also aims to bring online operators in line with existing legal gambling options such as the Chilean Charity Lottery, the Concepción Lottery, casinos, and horse racing.

A central directive of the proposal is the introduction of a 19% Value Added Tax (VAT) on digital betting services. Undersecretary of Finance Heidi Berner defended the tax structure, stating the total burden on operators would remain under 28%, consistent with international standards. The bill also outlines strong responsible gaming measures, including biometric ID verification, payment restrictions, and the ability to block unlicensed platforms.

Berner noted that several industry stakeholders have requested lobbying meetings to suggest modifications. The upcoming Senate vote will likely determine the speed and scope of the reforms.

Berner explained, “We carried out an exercise with the Superintendency of Gaming Casinos based on public information from the financial statements of some of the large betting platform companies operating in different parts of the world, and including the 19% VAT, we find that the tax burden does not exceed 28%. The legislative debate will resolve whether the levy should be this or any other.”

Lawyer Carlos Baeza, legal representative of the Online Gambling Association, highlighted the progress of the bill in the Senate. Baeza added, “the next stage of the debate focus on aspects that guarantee effective regulation, centered on user protection and sustainable tax collection.”

Meanwhile, in India, the Supreme Court concluded final hearings on August 8 in a landmark case concerning the applicability of GST on online real money gaming (RMG). The case involves a ₹2.5 lakh crore tax dispute, which is one of the largest in India’s legal history.

Justices J.B. Pardiwala and R. Mahadevan heard arguments from major gaming firms like Gameskraft and Delta Corp, alongside industry bodies AIGF, EGF, and FIFS. The Centre, represented by ASG N. Venkataraman, argued for a 28% GST on the entire bet value, treating it as a taxable actionable claim under Rule 31A of the CGST Rules.

Gaming companies contested this view, arguing that the rule should apply only to games of chance, not games of skill such as rummy, poker, and fantasy sports. They argued that GST should only apply to platform fees, not the total stake.

Senior lawyers Harish Salve, Abhishek Manu Singhvi, and others raised constitutional concerns, referencing the Sunrise Associates judgment to argue that games of skill do not generate actionable claims and so fall outside the GST framework.

This case also involved studying the validity of state-level bans on online gaming in Tamil Nadu and Karnataka. The ban raises broader legal and regulatory implications as if the activity of gaming firms translates into gambling and betting.

With judgment now reserved, the ruling is expected to affect the future of India’s booming RMG sector. It could thus, either reinforce legal clarity and investor confidence or even add further complexity to an already burdened industry.

Also Read: Philippines: Online Gambling Ban May Backfire, Fuel Illegal Operations