BETTER REGULATION
protection, transaction traceability for anti-money laundering purposes, enhanced due diligence standards, foreign investment, and employment. However, in practice, several jurisdictions have adopted regulatory approaches that fail to properly account for the impact of the black market. In many cases, these approaches inadvertently create incentives that foster its growth. This article identifies four regulatory failures that contribute to the persistence and expansion of the online gambling black market. 1. Regulatory inertia Online gambling is neither a new nor a poorly understood activity. A passive regulatory stance is therefore neither coherent nor beneficial. The regulation of remote gambling dates back more than three decades, including early frameworks such as Antigua and Barbuda’s Free Trade and Processing Zone Act of 1994, which introduced one of the first licensing systems for remote gaming. In this context, regulatory inertia – whether intentional or not – is not a neutral position. It allows demand to be satisfied in the absence of a legal framework capable of channeling it effectively. As a result, at least two types of operators emerge: “internationally supervised operators,” 2 licensed in other jurisdictions and operating under regulatory standards, and “unsupervised operators,” 3 which lack effective authorization and oversight.
While the former incurs compliance costs, the latter operate without obligations relating to consumer protection, anti- money laundering controls, or taxation. This creates an uneven competitive environment in which unsupervised operators gain a structural advantage. Over time, these operators develop business models that are incompatible with future regulatory frameworks, strengthening their incentives to remain outside the system and even to resist regulation. Consumers are exposed to increased risks, while the state loses potential tax revenues. The Chilean experience illustrates this dynamic. A bill regulating online gambling, introduced in March 2022 4 , remains under discussion more than four years later. In the meantime, the market has continued to expand through both supervised and unsupervised operators, amid legal disputes and enforcement actions 5 . This scenario demonstrates how regulatory inertia facilitates the consolidation of parallel markets prior to regulation. 2. Prohibition as a regulatory response The prohibition of gambling – and particularly online gambling – remains a regulatory response in some countries. In Latin America, the paradigmatic case is Ecuador: following the popular referendum of May 7, 2011, promoted by then-President Rafael Correa, Article 236 of the Comprehensive Organic Criminal Code criminalizes the operation of casinos, gaming halls, betting houses, or any business engaged in gambling activities, punishing it with imprisonment of one to three years.
developments from 2004 under the supervision of the Malta Gaming Authority), the United Kingdom (with a regulatory framework in force since 2005 under the supervision of the UK Gambling Commission), and the State of New Jersey in the United States (with a regulatory framework implemented since 2013 under the supervision of the New Jersey Division of Gaming Enforcement). These jurisdictions have developed regulatory environments that combine market openness, consumer protection, and effective supervision mechanisms to channel demand toward authorized operators. 2 This is the case, for example, of Malta, whose regulatory framework governs the provision of gaming services “from Malta,” thereby establishing a model that, in practice, allows licensed operators to offer their services on a cross-border basis, without prejudice to compliance with the laws of the jurisdictions where such services are made available. 3 Typical characteristics of websites operated by “unsupervised operators” include the absence of verifiable information regarding gaming licenses, or the use of licenses that are either non-existent or issued by entities lacking effective supervisory authority; the unavailability of terms and conditions in the language of the target jurisdiction; the absence of a legal domicile enabling the filing of claims; the lack of identification of the operating entity; the unauthorized use of software or brands belonging to international game providers; and deficiencies in customer support systems. 4 On March 1, 2022, then-President Sebastián Piñera submitted to the Chamber of Deputies Bill 14.838-03, titled “Law Regulating the Development of Online Betting Platforms.” 5 By judgment dated September 29, 2025, the Third Chamber of the Supreme Court of Chile upheld a claim filed by Lotería de Concepción, in which Polla Chilena de Beneficencia S.A. participated as a supporting third party, ordering the blocking of the websites identified in the claim. In practice, however, this measure did not prevent the continuation of online gambling services through domains not covered by the action. The provision of remote gambling services is not expressly regulated under Chilean law, highlighting the need for a comprehensive legislative solution through the bill introduced in 2022. Under the current legal framework, the only legally authorized gambling activities are: (i) horse racing (Law 4.566), (ii) casinos authorized by the Superintendence of Casinos of Gambling (Law 19.995), which are expressly prohibited from offering online gambling under such law, (iii) Polla Chilena de Beneficencia (Law 18.851), and (iv) Lotería de Concepción (Law 18.568).
IMGL MAGAZINE | JUNE 2026
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