Ecuador registers 65 betting companies after new gambling tax

In the first half of 2024, a significant surge of interest was noted within the Ecuadorian gambling sector, as 65 companies registered to comply with the newly instituted 15% gross revenue tax on sports betting, effective from July 1.

On June 28, the Ecuadorian government published Executive Decree No. 313 in its Official Gazette, officially implementing a 15% gross revenue tax for both domestic and international sports betting operators. This move aims to regulate the rapidly growing online sports betting market.

In addition to the operator tax, player winnings are subject to a 15% withholding tax. As of July 1, operators were granted a six-month window to update their systems to ensure compliance with these new regulations.

Damián Larco, a key representative from the Internal Revenue Service (SRI), noted that the registration of 65 companies marks a significant milestone for the market. While the majority of these operators are local entities, Larco confirmed that a few international companies have also entered the fray.

Despite this registration surge, Larco suspects that the actual number of active operators is considerably greater than 65. The SRI is closely monitoring the gambling landscape to ensure that offshore operators obtain the required licenses. Failure to comply will result in the blocking of offshore operators’ IP addresses, which emphasizes the government’s commitment to maintaining regulatory standards.

Ecuador’s Gambling Tax Hikes: A Challenge or Opportunity for Operators?

It is noteworthy that land-based gambling has been prohibited in Ecuador since 2011; however, there has been no explicit ban against sports betting, creating a unique market dynamic. This regulatory ambiguity has allowed for the growth of online sports betting platforms.

In 2024, discussions have emerged regarding the potential lifting of restrictions on brick-and-mortar gambling establishments, accompanied by the introduction of a robust regulatory framework for the overall gambling sector in Ecuador.

President Daniel Noboa initially included a provision in a public consultation aimed at gauging public opinion on implementing a comprehensive gambling regulation. However, this question was subsequently withdrawn in the wake of civil unrest linked to ongoing conflicts with drug cartels, reflecting the complex socio-political landscape affecting regulatory decisions.

As the gambling industry evolves, operators must stay abreast of regulatory changes and market conditions. Understanding these dynamics will be crucial for businesses looking to thrive in the burgeoning Ecuadorian sports betting market.

In conclusion, while the 15% gross revenue tax represents a new challenge for operators, it simultaneously validates the legitimacy of the sports betting industry in Ecuador. As more companies align with regulatory requirements, the potential for growth in this sector remains substantial, paving the way for future developments in both online and possibly land-based gambling venues in the country.