The online gambling market in Argentina: CONCLUSIONS

After analyzing the markets in the City and Province of Buenos Aires and understanding how online gambling has been legalized in many other Argentine provinces, we will conclude this INFOPLAY SPECIAL REPORT with a summary to help us evaluate Argentina's success in regulating online gambling.
After reviewing the provincial regulation processes, with particular attention to the City and Province of Buenos Aires, while detailing relevant data from jurisdictions such as Cordoba, Misiones, Entre Rios, Santa Fe, Tucuman, and Formosa, it is time to take stock and highlight the critical factors that online gambling companies have had to assume when entering Argentina.

To do so, we first place the regulation process of online gambling in Argentina within its economic, political, and social context. Next, we will define the observed characteristics of the current regulated Argentine market, and finally, we will detail the challenges that still lie ahead to complete a regulation process that leads the regulatory framework of online gambling in Argentina to a model position for other jurisdictions.

I - The Political, Social, and Economic Context

The regulation process of online gambling in Argentina has been limited by a context of economic crisis and several attempts at recovery using very different recipes: from the liberal approach of the Mauricio Macri governments to the center-left Peronism of the policies of Néstor and Cristina Kirchner.

Although in this duality, the gambling sector experienced this ideological confrontation up close in the process of legalizing online gambling in the Province of Buenos Aires, with Maria Eugenia Vidal and Axel Kicillof as protagonists, facing each other in the 2019 Provincial Governor elections, with a victory for Kicillof.

In any case, the search for solutions arises because in recent years, Argentina's economic situation has been very difficult and has been marked by high inflation, a fall in production and consumption, and a high external debt. The country's economy has faced a series of macroeconomic challenges, including currency depreciation, capital and workforce flight, and an economic recession.

All of this has created a highly risky context for operators and foreign capital (usually the engine of a regulatory process) to enter the country.

But in addition to inflation and the unsustainable level of external debt, the COVID-19 pandemic further exacerbated Argentina's economic challenges, with a fall in production and consumption to unprecedented levels.

At the political level, the apparent diversity in Argentina, understood as the wide range of parties, movements, and political opinions that exist in the country, is summarized in a duel between Peronism and other left-wing parties against liberal and conservative social movements. The Justicialist Party (PJ), the Frente de Todos coalition, represent the former, and the Radical Civic Union or Republican Proposal (Cambiemos) the latter. Cambiemos, which brought Mauricio Macri to the presidency in 2015.

The economic crisis and political diversity in Argentina explain the perception and evolution of a society where regional inequality is still a evident problem, as observed when discussing the different provincial regulations. Argentina is a very diverse country with several regions showing different levels of conservatism and development.

II - Characteristics of the Regulated Online Gambling Market in Argentina

Although the success of online gambling companies should depend on a combination of factors such as understanding and satisfying the users' needs or developing localized marketing strategies, when looking at the Latin American markets, adaptation to local regulations is the key element to prosper in the region.

In this heterogeneous and unorthodox regulatory environment, operators have had to deal with the following realities of the online gambling market in Argentina:
  • Provincial approach
Undoubtedly, the determining factor that has defined the regulation process in Argentina, where online gambling companies have had to study not only the market potential of each region but also the local laws, parties, and regulations in each province in which they wished to operate.

The absence of state legislation has meant that from obtaining licenses and permits, to paying taxes, and implementing responsible gambling policies and money laundering prevention, the scope has been provincial, with the striking case of having a regulation for the Province of Buenos Aires and another very different one for the City of Buenos Aires.

This reality makes it difficult to invest in key acquisition sources in other jurisdictions, such as Google Ads, where forcing operators from each jurisdiction to have specific domains makes it much more expensive and inefficient.
  • Territorial inequality
Related to the first section and very important when adapting to the customer and the localization strategies of companies, both preferences and purchasing power or cultural needs of Argentine users vary according to the province.

This may include the possibility of having a solid land-based gambling market (with payment methods enabled in establishments), the use of local themes and characters in games, and the consideration of specific gambling customs and habits.

Undoubtedly, the absence of even a proposal for regulation in 8 of the 24 Argentine provinces is due to territorial inequality, with provinces such as Santiago del Estero (located in the north of Argentina), relatively conservative, with strong traditions and customs, predominantly rural and lower levels of industrialization compared to others with a strong sense of local identity such as Catamarca.
  • Pre-existing legal framework
As in many European or Latin American countries, the process of a new legal framework for activities related to gambling, especially those related to the information society and the internet, tends to be complicated if the pre-existing legislation on the subject is scarce. In Argentina's case, legislation on gambling in the past has been limiting.

The games of chance such as lotteries, casinos, bingo, and slot machines have never been regulated by the National Legislative Power since the Constitution assigns their organization and exploitation to the provinces (art. 75 Const. Nac.). Therefore, there has been no legal framework for the commercialization of games of chance or betting activities, only including some aspects to be regulated in criminal matters.
  • The role of lobbies
Regarding lobbies, it is worth noting that in several regions of Argentina, the voice against the legalization of gambling has had one of the most important actors in the political decision-making process in religious groups (mainly the Catholic Church). However, as in most Latin American countries, it is the large political parties that include these interest groups in their bases and related associations.

So in any case, their influence has always been at the provincial level and according to the particularities of each jurisdiction, where usually the gaming companies or associations have been in the sights of the Kirchnerist ideology.

This explains the irregular speed when addressing adjustments in provincial regulations by the major land-based gaming sector referents such as Grupo Mautone (Casino Victoria in Entre Rios or Casino Maipú de Mendoza) or Grupo Boldt (bPlay).

  • Expansion of payment methods
Unlike the difficulties encountered in the initial regulatory process in Colombia, in Argentina (especially due to the pandemic), there has been a generalization of online transactions.

Knowing that it is crucial to offer payment methods such as credit and debit cards, bank transfers, electronic wallets, and also cash payment solutions, the development in this field has been an ally to regulatory processes; new instruments such as Total Coin, AquíCobro, or Cajas Express have emerged.

  • Localized marketing strategies
With the luck of coinciding with Argentina's victory in the World Cup, something that has united the whole country, localized marketing strategies (especially in the most densely populated areas) have characterized the beginning of the regulated market in most provinces.

Sponsorship agreements, synergies with physical operators, collaboration with local influencers and media have brought together the offer of promotions for new and existing players in provinces with a regulated market.

Also, the way to present and promote strategic alliances between online operators and reference establishments such as casinos and hotels is a component worthy of study, with suggestive cases such as the alliance between Codere and the Sheraton hotel group in Cordoba.

  • Significant delays
The difficult economic environment, government changes, and populist policies have caused delays in the entry of international operators and suppliers, as well as non-compliance with the bidding processes.

But in any case, and especially regarding online gaming, the need for revenue for the provinces (inequality) and the rise of illegal forms of gambling became weighty arguments that justified the desire to have a legal and protective framework for all players in the provinces that were clearer about regulating the sector, looking ahead to the 2022 World Cup.

III- Challenges to be faced (2023-2025)

The first great challenge and hope for dozens of operators is that the evident need for a state regulatory framework becomes a reality. Following the model of the United States or (considering the similarity with Germany, where the regulation of gambling and betting falls within the competence of the 16 provinces or Länders). A control legislation that allows for market integration even though they are regulated provincially.

The successful case in Colombia, with a general legal framework on online gaming, which boasts of establishing minimum and uniform principles on the matter, should serve as an example for the Argentine State to complement and adapt provincial autonomies and local realities, in the framework of a reality like the one already experienced with Quni6, the public lottery game that also managed to establish itself at the state level, involving all provinces and their authorities, greatly improving the performance and popularity of this game.

Another challenge for Argentine authorities is to analyze revenue models and the amounts contributed by operators to harmonize the tax burden and allow learning from successful cases in provinces where the highest percentage of gambling revenues are destined for public works and services, while in others there is no expected transfer of what the sector generates to social assistance.

The synergy with other similar markets that share language and culture (something that hardly happens in Europe) is something that Argentina should be able to boast about in its continental leadership position. At the international level, operators such as Betsson, Codere, Betwarrior, with a presence in other countries such as Mexico, Brazil, Canada, Chile, Ecuador, Bolivia, Peru, Paraguay, Costa Rica, Panama, or Uruguay, or even operators with a presence in multiple provinces (Bplay), should contribute to greater efficiency and service.

Reviewing the powers granted in the past in terms of gambling (especially in the form of prohibition or restriction) to some provincial capitals and large cities, such as Buenos Aires or Córdoba Capital, is also extremely important to avoid scenarios such as the one contemplated in the province of Córdoba, where everything is already prepared for the market to open, but there is still a possibility that Córdoba Capital may prevent its citizens from playing online on authorized operators. This is due to an ordinance in the Public Entertainment Code that prohibited the installation and operation of gambling games.

Lastly, a regulation focused on knowledge and regional particularities should allow responsible gaming measures taken by some provinces, such as excluding players who are part of social assistance programs from registering with operators, to be exported in the event of success. In this case, the predominance of the provincial and municipal spheres would make it easier to verify whether such measures are effective.

For more information:

Read Part 1 - Buenos Aires Regulation (Province and City)

Read Part 2 - Online Gambling Regulation in Argentina
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