- October 17, 2023
In recent times, the Latin American area has become a lively and swiftly advancing center for the iGaming sector. Ranging from Mexico's lively gaming arena to the emerging markets in Brazil, Argentina, and more, the iGaming landscape in Latin America is currently undergoing a striking alteration. This transformation is the result of a blend of evolving regulations, the growing spread of the internet, and the region's enthusiastic enthusiasm for sports and entertainment.
As we explore the complex array of possibilities and obstacles in the Latin iGaming sphere, this piece thoroughly examines the patterns, influential figures, changes in regulations, and cultural elements that are molding the future of online gaming in this captivating region. Embark on this journey with us to uncover the factors driving the Latin American iGaming industry towards a fresh era of innovation and growth.
Overview of Latin America
Many countries in the world have a hard time dealing with the effects of the pandemic. Some economies haven’t fully recovered yet. Others had bounced back almost immediately. One of these economies is Latin America's. Despite the pandemic, invasion of Russia to Ukraine, and the increasing global interest, Latin America’s economy still managed to expand by almost 4% in 2022.
The region’s employment and service sector had recovered and came back strong. However, the inflation in the region is still not at its best. Some countries in Latin America like Brazil, Mexico, and Chile still have high inflation rates.
This year is said to be challenging for the region. With high interest rates and falling commodity prices, consumer and consumer buying goods and services are slowing. This means that business confidence in the region is also weaker.
As the economy’s growth in the region slows down, the living standards of its people will also decline. The income division in Latin America is as follows:
Moving forward with the overall GDP of the region, the GDP per capita is US$10,193.78. The biggest contributors in terms of GDP per capita are Uruguay, Chile, Panama, Argentina, Mexico, Costa Rica, Brazil, Peru, and Colombia. And Brazil is still part of the fastest growing economies in the world including Russia, India, and China.
Latin America has witnessed a blend of economic achievements and trials. While certain countries have demonstrated significant advancement and growth, others have grappled with challenges like unequal income distribution, impoverishment, and increasing unemployment. Persistent economic instability, fluctuations in currency values, and dependence on the export of commodities have posed recurrent hurdles for numerous countries across the area.
Several Latin American countries have taken steps to cultivate innovation and progress in technology. New businesses and technology centers have emerged in urban centers such as São Paulo, Mexico City, and Bogotá, contributing to the expansion of the digital economy.
The middle class in Latin America is on a swift rise, playing a role in the expansion of commerce and economics, given this demographic's increased disposable income for leisure activities, including iGaming.
With over 70% of the population in Latin America owning smartphones, the domain of mobile gaming stands as a feasible form of entertainment. Recent times have observed various declarations by South American countries indicating their intent to establish or enhance regulations to oversee the industry.
A prime instance of this movement is Brazil, which is in the final stages of crafting legislation to oversee the iGaming sector. These endeavors work to create a more business-welcoming environment in the region, consequently enticing investors.
Another development that is seen in Latin America is the emerging Artificial Intelligence. AI and machine learning are now being incorporated in different businesses. Such technology can be seen in Argentina where HR operations are now being automated to do work tasks.
Political instability has been a concern in several Latin American countries, with instances of corruption, weak institutions, and governance challenges. Protests and demonstrations related to issues like government corruption, inadequate social services, and political repression have been common.
In countries characterized by political stability and robust legal frameworks, the contours of online gambling regulation tend to be more defined. These well-structured regulations create an environment conducive to iGaming operators operating within the confines of the law.
Additionally, the presence of political stability often paves the way for governments to consider propitious regulations that foster the expansion of the iGaming industry, contributing to economic growth.
Furthermore, the allure of political stability extends to attracting foreign investments and nurturing an atmosphere conducive to technological innovation, where iGaming operators are emboldened to invest in cutting-edge platforms and enriching user experiences.
Based on the data above, Uruguay is the Latin American country that has the highest political stability; Venezuela being the last. Overall, the average political stability of the region is -0.23.
The Current Gaming Market situation
As mentioned above, iGaming is slowly becoming a feasible form of entertainment in the Latin American region.
Latin America stands as a promising landscape for the iGaming sector, where markets that have opted for the regulation of iGaming casinos and sportsbooks are witnessing steady growth within the industry. Meanwhile, nations with favorable regulatory prospects on the horizon are bracing for remarkable expansion in the coming years.
Countries like Ecuador and Brazil currently bans all forms of gambling, including iGaming, except for state-operated lotteries. Brazil is also often referred to as the "sleeping giant" of Latin America despite the ban on gambling. In other nations, while iGaming lacks official regulation, it also isn't actively forbidden.
Bolivia and Nicaragua have integrated iGaming into their broader regulatory frameworks for the gambling sector as a whole. In Argentina, the regulation of iGaming is approached on a province-by-province basis.
Other countries are actively contemplating or pursuing adjustments to their iGaming legislation - this includes Brazil and Bolivia. Meanwhile, Colombia has unveiled a draft resolution focusing on anti-money laundering measures.
Let’s take a look at some of the biggest players in the gambling industry among the Latin American countries.
Currently, the population of Argentina is more than 45 million. The oversight of gambling in Argentina is executed at the provincial level, where each province holds the authority to make decisions concerning casinos and iGaming. Operators permitted to offer their services exclusively to residents of their respective provinces. In jurisdictions that choose to regulate, operators are authorized to provide a wide array of gambling options.
Presently, over 15 provinces have already legalized iGaming, including the populous Buenos Aires metropolitan province, home to over a third of the country's population. In 2021, this province's regulatory body permitted collaboration between local and international companies.
Argentinians exhibit a keen interest in lottery games such as the National Quiniela, Quiniela Cordoba, and Provincial Quiniela, with variations existing based on provincial authorization. Additionally, bingo, horse racing, and sports betting, especially for sports like football, basketball, and tennis, hold a significant place in the hearts of the populace.
Estimations place the annual revenue generated by Argentina's iGaming and gambling sector at US$2.4 billion.
Brazil, the largest and most populous country in Latin America, is often called as the "sleeping giant" in the gambling industry. This is because the country has a huge potential (e.g large population, passion and love for sports, and economic power position) but the gambling sector in the country is yet to be matured.
Currently, most gambling activities remain prohibited. However, a special committee was established in 2016 to formulate regulations for the sports betting sector. Although gambling legislation was eventually passed in 2018, the actual implementation of the framework has been subject to delays. Notably, Bolsonaro recently announced his intention to finally endorse the regulations.
Upon the implementation of these measures, Brazil will emerge as one of the globe's largest sports betting markets, both land-based and iGaming. With a population surpassing 200 million, estimation of more than 63% with access to mobile technology, and a nationwide fervor for sports, especially football, Brazil presents an enticing prospect for sportsbook operators aiming to expand their presence in Latin America.
The entire iGaming industry has been closely monitoring developments in Brazil, and for good reason: the country's sports betting market is projected to exceed US$1 billion within five years of regulation.
Brazil commands the most significant gambling market in Latin America. Renowned for their fervent enthusiasm for football, Brazilians naturally extend this passion to betting. Furthermore, the market's magnitude is notable, given the population's staggering count of over 200 million. Additionally, more than half of Brazilians possess mobile accessibility.
While betting, particularly in the context of football, occupies a preeminent niche, Brazilians' penchant for wagering extends beyond the realm of the beautiful game. Betting on horse racing enjoys widespread popularity, followed by mixed martial arts and basketball.
In March 2022, Chile's Ministry of Finance put forth a proposal to establish regulations for the iGaming sector. The current rules prohibit even the licensed brick-and-mortar casinos in the country from extending their services iGaming. The proposed regulations aim to permit both casino gaming and sports betting, with the dual goals of boosting tax revenues and ensuring the safety of players.
Presently, sports betting operates under a state monopoly, and online casinos are deemed illegal. Should the legislation for regulating online gambling be approved, Chile would join the ranks of the latest Latin American markets to open their doors to operators.
Colombia emerges as one of the prominent markets in Latin America, offering a significant opportunity for iGaming enterprises, particularly iGaming sportsbooks. With a population exceeding 52 million, ranking as the fourth-largest economy on the continent, a mobile penetration rate of around 56%, and a well-established national affinity for football, Colombia presents a substantial prospect for businesses in the iGaming sector.
In a pioneering move for Latin America, Colombia initiated the regulation of iGaming in 2016. Since licensing commenced in 2017, the gaming and betting market has displayed steady growth. Under the 2016 regulation, nearly all forms of gambling, whether land-based or iGaming, have gained legal status in the country. The exception pertains to online horserace betting, where trackside operations are limited to Coljuegos, the national regulatory body, and private entities with government concessions.
As the industry continues to expand, it reveals impressive statistics. The state revenue observed an 18% increase in 2022 compared to the preceding year, amounting to US$175 million.
The market's rapid evolution contributes to the expansion of gross gambling income on an annual basis. Consequently, despite the abundance of choices available, Colombian players consistently seek fresh experiences, driving the trend toward the exploration of novel gaming content. As a result, iGaming operators are compelled to continually broaden their range of games like slots, live dealer games, poker, virtual sports, card games, and casual gaming options.
With a population surpassing 128 million, an estimated mobile penetration rate of around 60%, and the second most robust economy in Latin America, Mexico is widely acknowledged as fertile terrain for novel and expanding iGaming and sportsbook operators.
The majority of gambling forms within Mexico are subject to regulation, except for land-based card room and fantasy sports. Reflecting the broader trend in Latin America, games of chance enjoy considerable popularity across the country, with a heightened fervor evident among bettors when it comes to football wagering.
The primary legislation governing gambling in Mexico is the Federal Gaming and Raffles Law of 1947, with comprehensive regulations finally taking effect in 2004 following extensive deliberation. Mexico's gambling market contributes approximately US$300 million in revenue yearly.
A diverse range of gambling forms garner popularity, particularly games like blackjack and baccarat. Yet, the apex of excitement is undoubtedly linked to sports betting, with football reigning supreme in the hearts of many Mexicans.
Almost all forms of gambling are regulated in Panama. Online gambling is subject to local licensing, and operators can offer sports betting, auto race betting, and a full range of casino games. Some products, however, are prohibited; the list includes lottery games, betting on horse races, amateur events, political elections, and other events, at the regulator’s discretion.
Licenses cost approximately $49,900. Applicants must have a legal representative in Panama, comply with all rules and regulations, submit to a background check, and be established in the country. Online gambling is taxed 10% of Gross Gaming Revenue. Gambling in Panama is regulated by the country’s Gaming Control Board.
Regulatory changes announced in September 2020 made Panama one of the few countries in Latin America with a fully licensed online gambling market. Previously, licensees had been barred from offering their services to Panamanian citizens, but now operators will be allowed up to five “.pa” domains. Regulators anticipate licensing between 10 and 15 operations.
Almost all forms of gambling are legal in Paraguay. Paraguay’s sole licensed sports betting operator brings in roughly $4 million in taxes annually. In 2016, the government drafted a bill that would update some of the country’s gambling legislation, in particular when it comes to online gambling. In 2017 Conajzar, the local regulator, organized a sports betting tender that lasted for five years. In 2022 Paraguay decided to repeat this practice.
Peru falls into the category of a gray market. In this context, iGaming remains unregulated, leading to the absence of a national authority overseeing iGaming casinos. Nonetheless, all operators possess international licenses, often obtained from entities like the Malta Gaming Authority (MGA) or the authorities in Curaçao.
Within Peru, there exists a greater inclination among residents to engage in sports betting rather than participate in online casino activities. Recently, the Council of Ministers in Peru endorsed amendments to a bill aiming to regulate iGaming sports betting.
Peru exercises regulation over everything except fantasy sports, although iGaming operations have yet to commence. On August 12, 2022, President Terrones ratified a fresh regulation governing iGaming and sports betting, designating the Ministry of Foreign Trade and Tourism of Peru as the new official regulatory body.
Latin America's internet adoption rate is approximately 68.8% across the region, making it exhibit the most extensive online prevalence, encompassing about 75% of its total population with online connectivity.
Chile leads the pack concerning internet usage among all Latin American nations, boasting a 92% connection rate for its citizens. Despite having the continent's largest population, Brazil also commands the region's most substantial online user base, counting about 165.3 million internet enthusiasts in 2022 – surpassing the combined numbers of Mexico and neighboring Argentina. However, Brazil falls short of making it to the top ten in terms of internet access rates within the region.
The detailed number of internet users per country in Latin America is as follows:
Social Media Platforms
Finding out what social media platforms gamblers use the most is essential in determining the reach of the iGaming platforms of the operators. This is their way to advertise their iGaming casinos when they want to enter the Latin American iGaming Market.
As internet connectivity expands, the influence of social media proportionally increases. With approximately 490 million users in the year 2022, Latin America ranks as the fifth-largest global market for social media platforms. Notably, Brazil and Mexico dominate with the largest user bases on these platforms. Chile distinguishes itself with the highest social media penetration rate across all nations, with roughly 92.8 percent of its populace engaging with social networks.
Social networks emerge as the predominant form of media consumption across Latin America. This preference is further evidenced by the prevalence of staying connected with family and friends as one of the foremost reasons for internet usage in the largest markets within the region.
Moreover, social media platforms play a pivotal role in propelling the burgeoning online shopping market in the region, as more than 60% of platform users employ them to research brands and discover products. Relatively, social media platforms can be a great way for Latin Americans to search for iGaming websites.
Based on the data above, we can say that Facebook is still the number 1 used social media platform in the region. With the average of 58.8%, Facebook has been the most used social media platform among the 5 Latin American countries above. This is followed by Whatsapp with an average of 39.5%, Youtube with 32.1%, Instagram with 23.5%, Twitter with 14.3%, and Facebook Messenger with 12.3%.
The Latin American iGaming market is undergoing a dynamic transformation, fueled by a blend of evolving regulations, expanding internet connectivity, and a fervent passion for sports and entertainment. From the bustling gaming scene in Mexico to the emerging markets of Brazil and Argentina, the landscape is witnessing remarkable shifts.
As we navigate through the intricacies of the Latin American iGaming sphere, this article has delved into the trends, influential factors, regulatory changes, and cultural dynamics that are shaping the future of iGaming in this captivating region. Through this exploration, we've unveiled how political stability, or its absence, can significantly impact the regulatory landscape of the iGaming industry.
Besides the political stability of the region, its economy, internet situation, and social media penetration can also impact the region’s potential in the iGaming industry.
As the Latin American iGaming landscape continues to evolve, the role of political stability in shaping regulations, fostering growth, and propelling the sector forward cannot be understated. With a backdrop of changing regulations, emerging markets, and growing consumer demand, the iGaming industry in Latin America is poised for a new era of innovation, expansion, and exciting opportunities.