Two successful regulation models for online gaming: Colombia and Mexico

Colombia and Mexico are the two gaming jurisdictions in Latin America that, despite their deficiencies in regulatory, tax, and market integration matters have amply demonstrated the benefits of a regulated online marketplace. With the online expansion of gambling and sports betting, as well as digital payment methods, a regulatory framework adapted to the needs and preferences of consumers is more necessary than ever. Colombia and Mexico are the models in this respect. Peru, Brazil, Argentina or Chile could follow in its wake.

Latin America is one of the regions in which online games of chance have experienced the greatest growth in recent years. But, although there are national jurisdictions for physical casinos and game rooms,the regulation of the online market is still deficient. Steps are being taken in the right direction. The laws of Colombia and Mexico can serve as a model for other countries in the region.

Mexico: a decentralized model

Mástil y bandera mexicana en una plaza de Toluca, México.

The regulatory framework in Mexico dates back to 1947, the Federal Law of Games and Raffles. Although there is a beginning of reform, it does not seem that it will materialize in the near future. In Mexico, gambling and online betting are legal.©Ricardo Esquivel/Pexels

The growth of the online gaming market is undeniable throughout Latin America. National jurisdictions such as Mexico are making an effort to adapt to the new digital reality, although the approaches differ between countries. However, despite the existing disparity, everyone agrees aboutthe benefits of an adequate regulatory framework.

Online games of chance and betting are legal in Mexico and are under the supervision of the General Directorate of Games and Raffles dependent on theMinistry of the Interior (SEGOB). Although the state has its own operator,pronosticos.gob.mx, which offers lotteries, sports predictions and scratch cards,there is no monopoly| ||41 en este sentido.

The Federal Gaming Law is quite outdated, dating from December 1947. There is areform proposal which, however, does not seem that will prosper in the near future. In this sense, the law was developed to regulate physical gambling halls and houses, so the online jurisdiction has a link with physical gambling, different from the case ofColombia and the vast majority of European regulations.

In Mexico, to operate online it is necessary to enter into an agreement with a physical casino, as we have recently seen in theprinciple of collaboration between BigBola and Betsson. Ello quiere decir que no se pueden solicitar licencias online directamente, lo que sin duda es un contratiempo para algunos de los big players. In this sense, the Mexican jurisdiction, where the states have a great margin of maneuver, is similar to the United States, where the states that have important physical casinos only allow online gambling on the basis of an agreement for the use of the license of the aforementioned casino. In any case, onceregulation advances in the different states,the regulatory framework is transformed towards more flexible forms of cooperation|| |57. Un ejemplo similar en Europa lo encontramos en Bélgica.

Argentina is one of the Latin American countries that, due to its political structure, has advanced aregulation model for online gaming that is very similar to the Mexican one. States have licensing powers and operators must partner with a local firm to enter the application process. Although the states maintain a maximum number of permitted licenses, this does not happen with the City of Buenos Aires. In Mexicothere are also no restrictions on the maximum number of licenses to grant.

One of the problems associated with a decentralized system is thatthere is no central body that coordinates self-exclusion programs of the game andprevention of the addition.

Colombia: towards a European model of the game

Avenida iluminada por la noche.

Colombia counts with a modern licensing system very similar to the European one. Its market is in full expansion and has exceeded all growth expectations.©AltaGamba/Unsplash

Colombia happens to be the most successful regulated market in Latin America. The growth of theColombian online market has exceeded all expectations and the igaming industry is becoming a success story, surpassing the traditional physical betting and gaming establishments that, However, they maintain a great local roots.

The legislation promoted by the Colombian authorityColjuegos has facilitated the incorporation of international operators, which is why the Colombian online gambling market | ||83ofrece una mayor integración thanthe Mexican market.

In this sense, the Colombian regulationhas been able to adapt to the demands of the market contextualizing its needs. With the cancellation of sporting events due to the COVID-19 pandemic, it adopted a more flexible approach andallowed live games as a compensatory measure for losses caused by the coronavirus economic crisis. International operators did not miss the opportunity to obtain the pertinent authorizations that have allowed them to operate with great success.

Thanks tonew software developments for live games it is possible to have more and better game modes and tables. Itsauthorization for Colombia has been one of the great successes of Coljuegos.

Flexibility when introducing new requirements and incorporating new products, a moderate tax policy and advertising regulation (including bonuses and sports sponsorships) without great restrictions, all of this has turned Colombia into a model for Latin America.

Although online operators would have expressed the wish that Colombia introducemeasures on the integrity of betting, events of great international resonance such as the recent one | ||106Copa América 2021 soccer tournament held in Brazil, have demonstrated the robustness of the regulated online market.

Colombia also hastransparent gaming, citizen attention and responsible gaming protocols, with a dedicated website:www .juegabien.co, although, as in Mexico, there is still no centralized self-exclusion system for the country.

Challenges for the future

The enormous possibilities opened up by the development of software that has made it possible to expand the variety of games, with virtual reality applications, for example, orthe incorporation of new betting modalities such asvirtual sports and esports, have broadened the horizon of gaming entertainment random online. The regulation needs to catch up on this aspect.

Thedigital payment methods present another challenge. Latin America isone of the regions where the use of bitcoin is most widespread. The use of cybercurrency for digital payments, which has recentlyaccepted in El Salvador, including deposits in online casinos, poses significant regulatory challenges. Bitcoin, Ethereum or Litecoin are not legal tender currencies, they are subject to great financial volatility and their speculative use can generate many problems.

Although Europe continues to concentrate the largest part of the online gambling and betting market, legislative changes such as those that have occurred in the United States with the legalization of gambling mean that it is beginning to be observeda displacement of the igaiming business towards the Americas. Latin America can benefit a lot from this, and Mexico and Colombia are the best placed countries to take advantage of the pull of digital casino games and online sports betting.

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