The Gambling Law Review: Argentina
Argentina is organised under a federal model,4 in which the competence to regulate gaming and gambling is held by local jurisdictions.5 Argentina has 23 provinces and the City of Buenos Aires, which has a status similar to a province, all with regulatory competence over gaming and gambling.6
There are more than 3,200 municipalities in Argentina with a second-level competence over these activities. Municipalities' competence is limited, in general, to the issuance of business permits for the operation of land-based facilities (approval of the opening of a facility in certain area within the municipality's geographical jurisdiction), security and hygiene compliance checks, advertising (within the municipality's geographical jurisdiction), etc. The extent of the municipalities' powers will be given by each provincial legislature. In the City of Buenos Aires, there is no municipal level of government.
Unlike other jurisdictions, there are no general definitions related to gaming and gambling. Instead, each provincial authority and the City of Buenos Aires have enacted their own gaming and gambling regulations, lacking a homogeneous approach to this matter. A comprehensive analysis of these regulations exceeds the scope of this chapter and, thus, a general reference to the situation in the country will be made.
Despite regulatory competence being retained by the provincial and City of Buenos Aires authorities, the Argentine Civil Code, in force until July 2015, included some provisions related to gaming, gambling and chance in Title IX of the Third Section of its Second Book. This Title IX referred to conditional agreements and understood gambling as an agreement taking place when two or more people engaging into a game oblige themselves to pay the winner an amount of money or another determined object.7 A bet was defined as happening when two people being of a contrary opinion over any matter convened that the one whose opinion was founded would receive from the other an amount of money or any other determined object.8
As of August 2015, the Argentine Civil and Commercial Code expressly excludes the application of its provisions to state-regulated games and bets, which will be subject to the regulations set forth in the rules authorising their offer.9
In general, regulations in force in the provinces and the City of Buenos Aires establish broad definitions on gambling and gaming and do not address specific forms of betting or betting products. As an example, we will refer below to the definitions in force in the City of Buenos Aires and the Province of Buenos Aires.
Section 3(a) of Law 538 of the City of Buenos Aires defines betting games as those games of chance, skill and mutual bets in which, with the goal of obtaining a prize, sums of money or other assets or goods with an economic value, and subject to be transferred by and between the participants, are pledged to the outcome of an uncertain event, regardless of the predominance of the players' skill, dexterity of mastery, or whether they are of chance, and whether taking place through machines, instruments or other means, of any kind or technology, or if they are performed through competitions of any sort.
In the Province of Buenos Aires, Law No. 13,470 defines games of chance, mutual bets and related activities as any kind of game or activity of a playful nature, performed through manual, mechanical, electro-mechanical, electronic, informatic or any other means, whose result depends exclusively or mainly on chance, luck or skill, and in which participation is allowed through bets of sums of money that are made with the goal of obtaining prizes of any kind and nature. This definition includes raffles, lotteries, pool betting (quinella) and draws, in all their forms, combinations and denominations, as well as simple and mutual bets on races, sports competitions or playful activities of any nature, with the exclusion of those games taking place in family households with the participation of family members and guests.10
The general rule for gambling and gaming in Argentina is that they are prohibited unless expressly authorised by a competent authority. This rule was set forth in local regulations and, as of December 2016, is included in the Argentine National Criminal Code.11 Betting on the results of lottery draws is not regulated.
ii Gambling policy
As mentioned, the general rule in Argentina is that unless expressly authorised by competent authorities, gambling and gaming are prohibited. Provisions of this nature are enacted in all local jurisdictions.12 This regard towards gambling and gaming resulted in an amendment to the Argentine National Criminal Code in December 2016. Through Law No. 27.346, section 301 bis was incorporated into the Argentine National Criminal Code. Pursuant to this section, the operation of gaming and gambling businesses without an authorisation granted by competent (local) authorities is considered a criminal offence that carries a penalty of three to six years' imprisonment.
Despite the general rule mentioned in the previous paragraph, gaming and gambling are widely accepted in Argentine society. In fact, land-based gambling is regulated and authorised within Argentina and casinos, horse racing tracks, betting shops, amusement arcades and lottery ticket sale venues are authorised to function depending on the jurisdiction.
As for online gambling and gaming, even though some jurisdictions regulated online gaming and gambling,13 there were no major advances in the development of this market. The activity of operators was limited to areas with a relatively small population, and whenever it transcended to other more heavily populated areas (such as the City of Buenos Aires), they faced prosecution (administrative and criminal as of December 2016) and website-blocking measures. This increased the operators' exposure and limited the development of the Argentine market in terms of online gambling and gaming.
The situation started to change in the second half of 2018, when the two major districts of Argentina in terms of population and income (the City of Buenos Aires and the Province of Buenos Aires) advanced in the regulation of online gaming and gambling and executed a cooperation agreement in connection with this matter.
iii State control and private enterprise
Depending on the jurisdiction, limits to the privatisation of gambling and gaming activities can be found in Constitutions. Examples of this situation can be found in the City of Buenos Aires and the Province of Buenos Aires' Constitutions.
Section 50 of the Constitution of the City of Buenos Aires establishes that the City regulates, manages and exploits games of chance, skill and mutual betting, not being admitted their privatisation or concession except in matters related to distribution and sale agencies. Gambling and gaming proceeds are destined for welfare and social development.
Section 37 of the Constitution of the Province of Buenos Aires sets forth that all its inhabitants have the right to receive, through effective welfare policies, the proceeds of games of chance duly created and regulated by law. The Province retains as non-delegated right to the federal state the management and exploitation of all casinos and gaming halls thereof, existing or to be created; in this sense this Constitution does not allow the privatisation or concession of the state bank through any legal form. The law regulating this provision may allow the participation of private capital in touristic development ventures, as long as it does not imply a privatisation or concession.
Notwithstanding these provisions, both the City of Buenos Aires and the Province of Buenos Aires have undertaken the regulation of online gambling and gaming, allowing the participation of privately owned corporations on the understanding that it does not imply an infringement to their Constitutions.
The competent authorities retain regulation and control competence over gaming and gambling. Land-based lottery and pool-betting products are state-owned, and the participation of privately owned companies is allowed in aspects related to their management and distribution. Jurisdictions offering online gambling and gaming products also adopt a similar approach.
iv Territorial issues
As mentioned, the 23 Argentine provinces and the City of Buenos Aires retain regulatory competence over gambling and gaming. In some jurisdictions, municipalities also have a second-level competence limited, in general, to the granting of business permits, security and hygiene compliance checks, advertising, etc. Argentina does not have jurisdictions with a favoured status for gambling and gaming.
v Offshore gambling
Offshore gambling is, in principle, prohibited in Argentina. All jurisdictions that have moved forward in the regulation of online gambling and gaming have required operators to establish a local entity and apply for licences, authorisations or permits through said local entities.
The City of Buenos Aires has adopted active measures against offshore gambling operators, seeking to block their activity within that jurisdiction. Measures included administrative and, later on, criminal prosecution, as well as the request of website-blocking orders. The legal basis for said measures have been the previsions of Sections 116 and 117 of the Contravention and Misdemeanor Code and, as of December 2016, Section 301 bis of the Argentine National Criminal Code.
The City of Buenos Aires has regarded as offshore operators both companies overseas and companies and individuals holding licences granted by other Argentine jurisdictions, such as the provinces of Formosa and Misiones. The judiciary of the City of Buenos Aires has adopted a similar approach to offshore gambling as the one outlined in State of New York v. World Interactive Corporation, Docket No. 404428/98, decided on 22 July 1999. In other words, following this case law it was understood that bets took place in the jurisdiction where punters were present (it did not matter that the servers were hosted overseas, since data was downloaded to the punters' computers). In this way, it was not relevant that the operators had a licence in the province of Misiones or Formosa, taking into consideration that online betting was not authorised in the City of Buenos Aires.
Legal and regulatory framework
i Legislation and jurisprudence
The legal framework applicable to gambling and gaming, from a regulatory standpoint, is mainly local. Originally, regulations were intended to repress gambling and gaming, evolving later on to the regulation of these activities, first in their land-based form and currently in their online one.
Following the distribution of competences set forth in the Argentine National Constitution, criminal (including anti-money-laundering and counter-financing of terrorism regulations), labour and foreign exchange regulations are issued by the Argentine federal government, while tax regulations are issued by all government levels, with some limits applicable to the provincial and municipal authorities.
Argentina follows the continental tradition and, therefore, the value of case law is, in principle, limited.
ii The regulator
As regulatory competence is retained by the Argentine provinces and the City of Buenos Aires, there are 24 competent authorities in connection with gambling and gaming. All regulators are listed below:
- Lotería de la Ciudad de Buenos Aires S.E. (City of Buenos Aires);
- Instituto Provincial de Lotería y Casinos de la Provincia de Buenos Aires (Province of Buenos Aires);
- Caja de Prestaciones Sociales de la Provincia de Catamarca (Province of Catamarca);
- Lotería Chaqueña (Province of Chaco);
- Instituto de Asistencia Social de Chubut (Province of Chubut);
- Lotería de la Provincia de Córdoba S.E. (Province of Córdoba);
- Instituto de Lotería y Casinos de Corrientes (Province of Corrientes);
- Instituto de Ayuda Financiera a la Acción Social (Province of Entre Ríos);
- Instituto de Asistencia Social (Province of Formosa);
- Banco de Desarrollo de Jujuy S.E. (Province of Jujuy);
- Instituto de Seguridad Social de La Pampa (Province of La Pampa);
- Administración General de Juegos de Azar de La Rioja (Province of La Rioja);
- Instituto Provincial de Juegos y Casinos de la Provincia de Mendoza (Province of Mendoza);
- Instituto Provincial de Loterías y Casinos de la Provincia de Misiones S.E. (Province of Misiones);
- Instituto Provincial de Juegos de Azar de Neuquén (Province of Neuquén);
- Lotería para Obras de Acción Social de la Provincia de Rio Negro (Province of Río Negro);
- Ente Regulador del Juego de Azar de la Provincia de Salta (Province of Salta);
- Caja de Acción Social de San Juan (Province of San Juan);
- Caja Social y Financiera de la Provincia de San Luis (Province of San Luis);
- Lotería para Obras de Acción Social de la Provincia de Santa Cruz (Province of Santa Cruz);
- Caja de Asistencia Social de la Provincia de Santa Fe (Province of Santa Fe);
- Caja Social de Santiago del Estero (Province of Santiago del Estero);
- Instituto Provincial de Regulación de Apuestas de Tierra del Fuego, Antártida e Islas del Atlántico Sur (Province of Tierra del Fuego); and
- Caja Popular de Ahorros de la Provincia de Tucumán (Province of Tucumán).
All state lotteries are members of the Association of Argentine State Lotteries (ALEA). The ALEA is a member of both the World Lottery Association and the Iberoamerican Corporation of Lotteries and State Bets. The ALEA works as an industry association but has no regulatory and enforcement competence in connection with gambling and gaming.
iii Remote and land-based gambling
The legal framework has been designed for bricks-and-mortar gambling, being later on expanded in some jurisdictions to online gambling and gaming. Even though the nature of an activity or behaviour remains the same whether it is performed online or in the physical world and should be regarded without reference to the medium where it was performed,14 some regulations have adopted a differential approach taking this circumstance into consideration. As an example, the online gambling regulations enacted in the City of Buenos Aires expressly exclude land-based permit holders from the possibility of applying for an online gambling agency permit15.
Section 301 bis of the Argentine National Criminal Code applies both to land-based and online gambling and gaming.
iv Land-based gambling
Land-based gaming is regulated and authorised in all jurisdictions in Argentina. At a very high level, casinos, other gambling venues (without dealers), lottery ticket sales venues and betting shops may be found across the country.
As an example, in the City of Buenos Aires, there is a floating casino with over 100 tables and 1,500 electronic gaming machines; a horse-race track with over 4,000 electronic gaming machines running; and over 1,200 lottery ticket sales venues.16
In other jurisdictions and in general in Argentina, there are more gambling venues (without dealers) than casinos (with table games with dealers and electronic gaming machines), although there are no nationwide figures available on this matter.
v Remote gambling
Argentina does not have a nationwide remote gambling offer. In general, remote gambling is limited to certain provinces that have regulated online gaming17 and restricted to players located within those jurisdictions. Since geoblocking is in principle not available in Argentina, restrictions related to accepted payment methods have been adopted and have worked so far as a solution to territorial issues related to online gaming. As an example, players are only allowed to cash in and cash out in lottery ticket sale venues or betting shops located within the province or jurisdiction granting the online gaming licence.
vi Ancillary matters
Unlike other jurisdictions, in Argentina only operators are subject to licensure. Some jurisdictions require suppliers, components and certifying laboratories to register with the regulators18 with substantial less scrutiny than in a licensing process. Also, some jurisdictions require that electronic gaming machines and other terminals are certified as compliant with international standards.
vii Financial payment mechanisms
In Argentina, gambling and gaming transactions need to be performed in Argentine pesos. Some jurisdictions also require that gambling operations are conducted through state-owned banks.19 Although cryptocurrencies are not prohibited in Argentina, their use for gambling and gaming has not been authorised.
The licensing process
The licensing process should be reviewed on a case-by-case basis, depending on the jurisdiction involved. This includes both the applicable requirements and the sanctions for non-compliance, with the caveat that operating without a licence is regarded as a criminal offence pursuant to Section 301 bis of the Argentine National Criminal Code.
Licensees and, in certain jurisdictions, regulators are responsible for ensuring compliance with anti-money-laundering and terrorism-financing regulations. Resolution No. 199/2011 of the Unit of Financial Information expressly addresses the gambling industry and establishes the policies that shall be adopted by licensees and other obliged subjects (any other natural person or corporation running a gambling operation) to prevent money laundering. As mentioned, regulatory competence over this matter resides with the Argentine federal government.
Being a country organised under a federal model, Argentina has three taxation levels: federal, provincial and municipal. In the City of Buenos Aires, the taxation levels are only two: federal and provincial.
At a federal level, the following taxes may apply to operators' activity:
- income tax, at a 41.5 per cent rate over income;20
- value added tax, in principle at a 21 per cent rate provided the operator charges fees to participants or players (i.e., rake at poker); and
- credits and debits tax, at a 6 per cent rate over credits and 6 per cent over debits on the operators' bank accounts. Up to 33 per cent may be regarded as an advance payment of income tax.
Additional taxes may also apply to any prizes collected by participants or players (i.e., indirect tax on online bets and wagers,21 and the tax on prices).22 Players' winnings may be subject to income tax if they are professional players or e-sports athletes.
At a provincial level, the following taxes may apply to the operators' activity:
- turnover tax, in general levied over gross gaming revenue and at rates to be established by each local jurisdiction;
- administrative fees, payable to regulators; and
- stamp tax – agreements executed by operators may be subject to this tax.
In the case of operators with offices and other land-based venues, municipal taxes may also be applicable. As mentioned, there is no municipal taxation level in the City of Buenos Aires.
Advertising and marketing
In principle, there is no distinction between advertising and gambling activities in regulations. Thus, if all gambling and gaming operation is forbidden unless expressly authorised by the competent authorities, only licensed operators will be allowed to engage in advertising and marketing and subject to the existence of advertising and marketing agreements in place among the different jurisdictions with regulatory competence. Many jurisdictions require that warnings are included in all advertising.23
With the advance in regulation of online gambling and gaming, it is expected that jurisdictions will reach an agreement so as to allow nationwide operations, marketing and advertising, alongside responsible gaming actions.
The year in review
The year 2019 saw some major advances in the regulation of online gambling and gaming in Argentina's most important districts: the City of Buenos Aires and the Province of Buenos Aires. The approaches adopted in each case were different.
On one hand, the Province of Buenos Aires forced foreign operators to form joint ventures with local gambling companies, established higher financial thresholds to allow participation in the tender and limited the number of licences to seven. Notwithstanding this, 14 applications were submitted and are currently under review and analysis by the regulator. The fact that Governor Vidal lost the election in October 2019 meant a major setback in the time frame, and it is still to be determined if the limit to the number of licences will be kept by the new authorities, or increased so as to allow operators to run businesses in the Province and the City of Buenos Aires without limitations.
On the other hand, the City of Buenos Aires has only set a minimum number of permits to be granted (three) and established lower financial thresholds to allow companies to apply for permits. Major Rodriguez Larreta won the October 2019 election and was therefore re-elected. This boosted the online gambling regulatory process that had been undertaken by the City of Buenos Aires.
Year in review
The outlook for 2020 is uncertain at the very least. Covid-19 has had a major impact on land-based gambling and gaming, with closures of casinos, gambling venues, betting shops and lottery ticket sale venues enacted nationwide.
Taking into consideration the impact covid-19-related measures will have on tax revenues, it is likely that the Province of Buenos Aires will award online gambling licences and that the City of Buenos Aires will also award at least a first batch of permits.
Depending of the result of these processes, other provinces in which online gambling and gaming is not regulated may fall into line and either undertake licensing processes or execute agreements with other jurisdictions, such as the Province of Buenos Aires, the City of Buenos Aires or other provinces that have regulated online gambling and gaming.
In any event, there are several core matters that need analysis and resolution by regulators in Argentina in order to allow operators to run businesses nationwide. Without a comprehensive framework, a true development of the Argentine online gaming market will not be possible, exposing operators to uncertainty and undesired liabilities. Regulators will need to address core issues such as payment methods, advertising, tax rates and responsible gambling regulations.
Other matters that need addressing at a federal level involve enacting foreign exchange regulations to allow international liquidity, distribution of dividends to operators' parent companies overseas, and payment to foreign suppliers. At this point, international liquidity is not allowed and distribution of dividends to foreign shareholders as well as payments to foreign suppliers are subject to several limitations imposed by the Argentine Central Bank.
On a separate note, the overall situation and licensing time frame in Brazil is likely to have an influence in Argentina, either with companies starting an operation in Brazil and then expanding to Argentina or the other way around.
1 Tomás Enrique García Botta is a partner at MF Estudio – Abogados.
4 Section 1 of the Argentine National Constitution.
5 Section 121 of the Argentine National Constitution and case law of the Argentine National Supreme Court of Justice (Fallos: 322:1142, among others). The Argentine National Congress retains regulatory competence over criminal matters, AML/CFT and taxes (the competence to establish taxes is, with some limitations, shared with provincial and the City of Buenos Aires' legislatures).
6 The Argentine Federal Government was involved in gaming and gambling activities through the National Lottery, a public corporation that offered certain products (lottery, pool betting, betting on the results of football matches, etc.) pursuant to agreements entered into with local competent authorities until February 2018. The National Lottery was dissolved through Decree No. 95/2018 of the Argentine National Executive.
7 Section 2,052.
8 Section 2,053.
9 Section 1,613.
10 Section 2.
11 Section 301 bis.
12 As an example, see Law No. 13,470 of the Province of Buenos Aires and Sections 116 and 117 of the City of Buenos Aires Contravention and Misdemeanor Code.
13 Misiones, Tucumán, Neuquén, San Luis, Entre Ríos, Chaco, Río Negro and La Pampa.
14 See Falque-Pierrotin quoted by Villar Palasí, José Luis: Implicaciones Jurídicas de Internet, Revista Saberes, Volume 1, 2003, Universidad Alfonso X El Sabio, available at www.revistas.uax.es/index.php/saberes/article/view/680.
15 Section 8(d) of Resolution No. 321/2018 of LOTBA's board of directors.
16 See Management Report 2017–2018 available at www.loteriadelaciudad.gob.ar/site/Documentos/Institucional/Informe%20Gestion%20Julio%2017%20-%2018.pdf.
17 Misiones, Tucumán, Neuquén, San Luis, Entre Ríos, Chaco, Río Negro and La Pampa.
18 As an example, see Resolution No. 220/2019 of the Province of Buenos Aires regulator setting forth a registry for online gaming laboratories and Resolution No. 11/2020 of LOTBA.
19 As an example, see Section 8 of Law No. 538 of the City of Buenos Aires and Section 163 of Law 15,079 of the Province of Buenos Aires.
20 Section 69, second paragraph of the Income Tax Law as amended. No tax will apply to the distribution of dividends derived from gaming operations, though it will be presumed that any dividends subject of distribution originated in activities subject to a lower tax rate (Section 149.10 of the Income Tax Law Regulatory Decree as amended). Income tax withholding applicable to the distribution of dividends is 7 per cent. The income tax rate may be lower for online gambling agencies in the City of Buenos Aires, as per LOTBA's understanding that this activity is not subject to the increased rate. However, since LOTBA has no competence over federal taxes, it remains to be seen whether the Argentine Federal Tax Authority will share this approach or not. This is a serious matter, since the general rate is 30 per cent and operators may face a criminal liability if it was understood that the 41.5 per cent rate was applicable.
21 2 per cent of the amount of the bet or wager.
22 31 per cent of the amount of the prize, and not applicable in the event of prizes collected in casinos or authorised gaming rooms.
23 See Law No. 4,182 of the City of Buenos Aires and Section 10 of Law No. 15,131 of the Province of Buenos Aires.