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Chile's has passed the country's Chamber of Deputies with the inclusion of a cooling-off period for current grey market operators and will now be sent to the Senate for final approval.

After less than an hour of debate, the pending bill and all of its amendments were passed on the floor of the Chamber of Deputies on Tuesday (December 12) by a margin of 97 in favour, 28 against and nine abstentions. 

The bill was first introduced by Chile's former government last year, but has since undergone a painstaking analysis by the Chamber of Deputies' economy committee, with lawmakers making significant changes.

A key provision of the bill is Article 13, which mandates a 12-month cooling-off period for current grey market operators active in Chile before they can apply for a local licence.

The fight over the legality of online gambling has been ferocious over the last year, with brick-and-mortar casinos claiming online gaming is currently illegal via multiple lawsuits, but offshore operators insisting the legal situation is far from clear. 

Chile's Supreme Court ruled in September that telecommunications operator Mundo Pacífico needed to block 23 betting sites on grounds they were operating illegally. Chilean prosecutors have since declined to pursue other cases against operators.

Deputy Miguel Ángel Calisto Águila referenced the recent court ruling during Tuesday's debate.

“The courts have said that we are dealing with a market that is illegal. What kind of sanctions are these bookmakers who are operating illegally today going to face? So how is it perceived by the public? As if we are whitewashing an illegal market that the courts have said is illegal, but that we are going to regulate it.”

The bill as approved by the lower house has a headline tax rate of 20 percent gross gaming revenue (GGR) for online operators. But the effective tax rate will be closer to 38 percent of GGR, much to the chagrin of operators, once 19 percent value added tax (VAT) is considered. 

After VAT is discounted, the remaining 81 percent will be taxed an additional 20 percent, plus 1 percent for responsible gambling and an additional 2 percent for sports betting. 

A study carried out by consulting firm Deloitte and published this week recommended a lower tax rate of 23 percent. 

Deloitte noted that “by incorporating the payment of VAT, an operating licence and a surcharge for online betting on sports competitions, the proposed taxation for online operators even exceeds the theoretical taxation of casinos”.

“I hope that the Senate has the capacity to make a more technical and less political analysis of the bill,” remarked Carlos Baeza, a lawyer who works with international operators LatamWin, Coolbet, Betano and Betsson.

“Senators, as a general rule, are a much more prepared chamber and less political, are capable of realising the great errors contained in the bill in relation to the tax burden and the enormous inconveniences that this generates, from the point of view of the drop in tax collection, the increase in illegal gambling and the lack of protection for the players.”