We’ve seen the issue of overregulation, but what about over-saturation?
Interestingly, both of those ‘problems’ are happening at the same time right now in Latin America, the difference being that they are happening across two major gambling jurisdictions.
In the first case, we have Brazil who not even two full years into launching regulated gambling is now hastily patching up legislative oversights it believes the inaugural framework needs – a quick paint job rather than a methodical and continuous approach that risks causing serious damage in the long-run.
When it comes to Peru, however, the completely opposite issue of oversaturation exists – where the conditions are so hospitable that competition becomes the main challenge, with regulations taking the backseat.
Eddie Morales, Business Development Manager at Zenith, spoke with Lucia Gando and SBC Noticias, to bring this paradox further into the limelight.
Peru as the outlier
Gando writes that, unlike other jurisdictions in Latin America where the biggest bottleneck has historically been obtaining a licence, Peru has gone in the opposite direction.
In the words of Morales, the country is known within the local fauna for how agile the market entry is, offering a process more streamlined than even some of the longest-running regulated gambling jurisdictions in the region.
“The main attraction of Peru is that the regulation is very flexible and allows all the bureaucracy to move forward smoothly. It is even faster than a market like Colombia, which has been regulated for much longer,” he said.
Taxes are also relatively easy on operators’ finances compared to other Latin America counterparts. “The tax burden is relatively low – 12% plus 1% represents a fairly low tax level. Even worldwide it is one of the lowest. I would say it’s an ideal scenario for any operator,” Morales noted.
Broken down, the two sets of taxes represent the dual taxation system currently in place in Peru, where licensed operators are subjected to the Special Gambling Tax capped at 12% on GGR, and an additional 1% tax on the value of each bet, otherwise known as the Selective Consumption Tax.
Combined, these conditions have turned Peru into a much-desired destination for gambling operators, but the attractiveness of it has also brought an unintended consequence, Gando writes.
I’m better than you
Morales continued: “The only thing about Peru is that it’s getting fuller. It is a very active market and continues to grow. I don’t remember exactly how many operators are already licensed there, but I think that by the end of this year we will be close to 100 licensed operators.” Keep in mind, Peru launched its regulated iGaming market in February 2024.
In that bunch you’ve got local brands as well as gambling internationals battling it out for market share.
The locally-known operators might inch ahead because of their name recognition, while the international brands have resources on their side to aggressively tackle the market. This essentially causes player acquisition costs to fluctuate.
All bark, nothing to bite
Corporate wars aside, licensees in Peru also need to factor in the purchasing power of the local population, which is not that strong compared to that within other more mature markets.
“The main difficulty of the market is in the return per player, which does not reach the levels of a first-level market. I would even consider Peru a third-level market when we talk about the player’s value,” Morales said.
This therefore begs the question – if I’m willing to outinvest my competitors when it comes to player acquisition, is it really that worth it if the players I acquire are not really a guaranteed long-term investment?
To read the full interview, which first appeared on SBC Noticias, click here.
