Ecuador’s betting market attracts 65 companies

Lea Hogg August 29, 2024

Share it :

Ecuador’s betting market attracts 65 companies

Ecuador’s Internal Revenue Service (SRI) has confirmed that 65 sports betting companies have expressed their willingness to participate in the country’s newly regulated betting market, agreeing to pay a 15 percent tax on gross revenue. This development marks a significant shift in Ecuador’s gambling landscape, which has been largely restrictive for over a decade.

The move to regulate sports betting follows the approval of the Law on Economic Efficiency and Job Generation, which introduced a framework for legal betting operations in Ecuador. According to Damián Larco, the Director of SRI, the 65 applicants include 63 local companies and two international operators. This new registry for sports betting was introduced in July, and it represents a crucial step toward formalizing the industry within the country.

The taxation model set forth by the law is quite stringent, imposing a 15 percent tax not only on the operators’ gross revenue but also on the winnings of players. This dual taxation approach aims to ensure that the government captures a significant portion of the revenues generated by this burgeoning industry. Additionally, SRI has taken a firm stance on enforcement, with plans to blacklist the IP addresses of any unlicensed operators. This move is intended to curb tax evasion and money laundering, issues that are often associated with unregulated gambling markets.

Despite the official count of 65 registrants, industry experts believe that the actual number of active sports betting providers in Ecuador may be higher. This discrepancy suggests that some operators may still be functioning in the shadows, outside the purview of the new regulatory framework. However, Larco has assured that SRI is actively monitoring the market to bring all operators into compliance.

From prohibition to regulation

Ecuador’s gambling sector has a tumultuous history. In 2011, a national referendum granted former President Rafael Correa the authority to ban all gambling establishments, leading to the closure of land-based casinos, bookmakers, and bingo halls. This decision was met with significant opposition, particularly from those who argued that the ban had a detrimental impact on the tourism industry. Before the ban, Ecuador attracted approximately 400,000 tourists annually, but these numbers have since dwindled, partly due to the lack of gambling venues.

The current situation regarding online gambling in Ecuador is ambiguous. While there is no explicit prohibition, the absence of clear regulations has created a grey area that many operators have exploited. Earlier this year, President Daniel Noboa attempted to address this issue by proposing a national referendum that included a question on whether to establish a fully regulated gambling sector. However, this initiative was overshadowed by a national crisis following the escape of drug kingpin Adolfo “Fito” Macías from prison, which plunged the country into a conflict between authorities and drug cartels.

Despite these challenges, the possibility of a regulated brick-and-mortar gambling market in Ecuador remains on the table. While the focus has primarily been on sports betting, there is growing interest in potentially expanding regulation to include other forms of gambling, which could provide a significant boost to the country’s economy if managed effectively.