How Buenos Aires looks set to step up with egaming and sports betting

Last week, local government officials in the Argentinian capital Buenos Aires launched their own regulatory process for egaming and sports betting, inviting licence applications from operators for potentially up to ten licences to operate.

This regulation seemingly stands in competition with the previously greenlit regulatory regime for the wider province, which has attracted international interest from operators including William Hill, Flutter Entertainment and The Stars Group.

But with two regulatory systems in the offing, have regulators bitten off more than they can chew with Buenos Aires? Argentine gaming and tax lawyer Dr. Tomás García Botta talks through the finer points with EGR Compliance.

EGR Compliance: Will the city and province of Buenos Aires operate as independent regulatory and taxation regimes?

Dr. Tomás García Botta (TGB): I think the city of Buenos Aires and the province of Buenos Aires will move forward to a cooperation agreement that, in time, may also include other jurisdictions. Otherwise, it is likely that gaming activities performed by operators in any of these districts will overlap, exposing operators to liabilities before the regulators.

From a local tax perspective, they are coordination instruments in place. It remains to be seen how they will be applied to online gaming operators, since their status will be different in the city of Buenos Aires and the province of Buenos Aires.

EGR Compliance: What are the possible implications of a two-tier regulatory system for online gambling and sports betting?

TGB: I think a two-tier regulatory system will likely cause friction between the jurisdictions, since it is very difficult to limit an online business to geographical boundaries. In the case of the city of Buenos Aires and the province of Buenos Aires the situation is even more complicated, since similar activities will be regarded in a different manner, thus giving way to a differential tax treatment and potential claims from the federal and local tax authorities. In my view, the regulators will need to have the tax authorities support their approach to online gaming regulation. Otherwise, operators will likely face unwanted liabilities that will eventually operate as a hindrance for the development of this industry.

In addition, regulators of the city and province of Buenos Aires need also to agree on a common criterion to consider important matters in the online gaming industry, such as what produces a regulatory link with a jurisdiction (players’ domicile vs. geolocation of the device through which the bet is placed), accepted payment methods, the possibility to offer gaming products to foreign residents, etc.

EGR Compliance: Do you believe this regulation carries the potential for more jurisdictions in Argentina to legalise online gaming and sports betting?

TGB: I think this will depend on the results of these regulation processes. If the city of Buenos Aires and the province of Buenos Aires succeed in their attempts to regulate, it is likely that other jurisdictions fall in line and legalise online gaming and sports betting as well. Should this be the case, it remains to be seen the way the jurisdictions will interact.

EGR Compliance: How have local operators responded to the sudden influx of international operators?

TGB: In the case of the province of Buenos Aires, international operators have been obliged to partner to with local operators and give them at least a 15% participation. In my view, this measure released some of the pressure that was placed by local operators when facing the possibility of being left aside of the process.

In the case of the city of Buenos Aires, the reaction of local operators and other local stakeholders (i.e. football clubs, retail shops, etc.) remains to be seen. The regulator may face some serious opposition if local stakeholders are not allowed to benefit from the regulatory process.

EGR Compliance: How do you think the BA provincial and BA local governments will address the issue of taxation?

TGB: I think this remains to be seen. The picture is much clearer in the province of Buenos Aires than in the city of Buenos Aires.  In addition, it may be hard to defend before the tax authorities that similar activities deserve a differential tax treatment whether they are performed in the city of Buenos Aires and the province of Buenos Aires.

In this sense, it may not be ruled out that the tax authorities of the city of Buenos Aires challenge the regulators approach and make claims to operators. This situation should be addressed urgently so as to give potential operators some degree of security on the applicable taxes and their global tax burden.