Challenges the LatAm region Faces in the iGaming Sector
Colombia and Latin America, as a whole, have been targeted by major industry players due to the potential the region holds. Studies from recent years have shown that although there are many challenges, the demand for online gambling services has been big in that part of the world. As a result from this, the number of both gambling operators and service providers interested to invest in local markets has grown rapidly.
In March, 2017, Coljuegos announced its plans to turn Colombia into the first Latin American country to regulate online gambling. And so, it happened. At the moment, Colombia is strongly emerging as a leading iGaming jurisdiction in the region. And even though it is not the most populous country in Latin America, the country boasts a strong internet penetration with well over half the population being internet users.
However, let’s gо back at the beginning of this movement towards the regulation of the online market. It began as early as 2015, with proper legislature officially recorded in the books in November 2016. And in March, 2017, Coljuegos announced its plans to turn Colombia into the first Latin American country to regulate online gambling. The new regulatory framework defined multiple gaming categories – covering sportsbooks, poker, fantasy sports, eSports, promotional games and online casino, among others – in addition to technical requirements for iGaming systems and land-based gambling. Licensed operators will pay a tax of 15% to 17% gross iGaming yield and will be required to ensure a return to player (RTP) of 83% through a .co website domain.
Operators must pay a levy of 15% gross gaming revenue (GGR) when the RTP, according to the rules of the game, is equal to or greater than 83% of the expected value of the bet. Another significant feature of the new regulatory framework is the liberalization of promotional games. These games allow companies to advertise and promote their goods or services by offering prizes to the players, without the requirement to pay to play. Thus, any business that markets products and services to the general public may have its own version of a sportsbook, lotto, poker allowing companies to increase sales and visibility of their brands.
Challenges in the iGaming sector in LatAm region
Despite this there are several challenges facing the newly regulated sector. Although Colombia represents a USD$1.5bn market and six out of 10 people are participating in gaming, there remains a widespread preference for conducting cash-based transactions and there remains a cultural aversion for paying goods and services over internet.
BtoBet’s vision regarding the Colombian market
Having a very strong presence in the country’s iGaming sector, BtoBet has decided to interview its Chairman, Alessandro Fried, regarding his forecast and vision as regards the Colombian market. Tackling the regulatory aspect that has characterized the sector in the past months, Fried is of the opinion that Colombia will eventually be placed in an ideal place in respect to the other LatAm countries having strongly regulated the online sports betting scene. However, he stated that the sector does present its own challenges, with the relatively high cost of the licenses being one of major concerns for the operators. An aspect that would require a significant degree of investment for those operators intending to enter the Colombian market. “A considerable amount of work is also needed to be compliant with all the requirements demanded by Coljuegos,” stressed Fried.
Being the first challenge, that operators must face on this market, however Fried emphasized the benefits of the regulatory setup. “Operating in such a strongly regulated scene will guarantee a very good level of protection for both the operators and the players themselves. This high level of regulation will act as a safeguard for all parties who have invested in providing a regulated environment for the players.” Fried noted that the betting and gambling scene is a strong factor in Latin American countries, and Colombia is no exception.
For deeper knowledge of the LatAm iGaming market, download BtoBet’s latest Industry report, titled: Colombia: An opportunity and an example for the whole LatAm region