How recent primary elections might affect the fledgling Argentinian egaming market

Egaming operators have been queuing up to apply for licences to operate in the Argentinian city of Buenos Aires, following the city’s decision to open its doors to online gambling for the first time.

However, Argentina itself has hit a fork in the road following recent primary elections in which the government of President Mauricio Macri suffered a humiliating defeat in the polls. The primaries, seen as a marker for the forthcoming elections which take place in October, have led to the devaluation of the Argentine peso against the dollar and a 35% decline in the country’s stock market.

With the prospect of a successful egaming market in the Latin American country potentially in the balance following the elections, EGR Compliance chats to Dr. Tomás García Botta about whether operators should think twice about packing their bags for Buenos Aires.

EGR Compliance: How will the currency devaluation affect operators entering the Argentinian market?

Tomás García Botta (TGB): Many companies calculate their earnings in dollars while the local gambling market moves in pesos. Until a few days ago a dollar cost X pesos and now it costs X + 25%. That variation was much larger during the entire course of the bidding process. For the utility expectation to remain stable, people would have to bet many more pesos than before. If the “spending capacity” of people accompanies this increase over time, the outlook could improve. The analysis of the costs that the companies will have to face for the operation must be added, especially those that are in dollars or are tied directly to the value of said currency. However, as I’ve said before, this analysis cannot respond only to today’s view of the market.

EGR Compliance: Do you believe the devaluation of the Argentinian peso will put those operators who have applied for licences off continuing their applications?

TGB: The devaluation causes a very relevant change in the expectations of potential operators, especially in respect of international operators. However, we do not believe that it is enough of a reason to think about abandoning the bidding process. Of course, they should pay permanent attention to the economic and political situation of the country since the current landscape that can be viewed today is not definitive. It is going through a crisis process that generates drastic changes in very short terms.

EGR Compliance: At what stage is the licensing process at? Have the seven operators who will receive licences been identified?

TGB: As I mentioned, what is expected as the next step is to identify the seven designated companies among the candidates for the operation. It is not possible to know with certainty if that choice is already made, although due to the progress made after the presentations, we believe that if there is any doubt, it should be minimal.

EGR Compliance: What is causing the delay?

TGB: To my knowledge, the political context is the most important factor. Not only the outcome of the primary elections, but the expectation of what could happen in the final election.

EGR Compliance: When do you believe regulated operations will take place?

TGB: I believe that at least three to six months should pass between the final award for the administrative licences and the technical adaptation of the operators to the new market. Although it was estimated that the operation could begin at the end of the current year or during the first half of 2020, uncertainty about the political landscape could delay or interrupt the normal procedure.

EGR Compliance: Have the issues regarding the town and provincial legislation in respect of taxation treatment been settled?

TGB: Not yet. The consideration of the territorial competence of each jurisdiction in relation to the “place where the bet is made” will be a condition for advancing on that path, as well as in future agreements (or problems) with other jurisdictions, not only at the fiscal level.