BETTER REGULATION
However, in an activity with persistent demand such as gambling, prohibition does not eliminate the conduct: it displaces it towards the black market. And when there is no authority with real enforcement capacity or effective legal instruments, prohibition becomes nothing more than a normative fiction. In Ecuador, despite the prohibition of gambling activities – both land-based and remote – there is no specialized authority with sufficient powers to combat illegal supply. As a result, the availability of websites offering virtual slot machines and online casino games not only persists, but expands, demonstrating the limited effectiveness of the prohibition model and the missed benefits associated with a regulated mark The Ecuadorian case also presents a relevant particularity: the prohibition does not extend to all betting activities. Indeed, sports predictions are not classified as games of chance under Ecuadorian law and are therefore permitted. This situation was expressly recognized through Executive Decree 742, published on May 17, 2023 6 , which authorizes their online exploitation. However, this partial legalization has not contained the expansion of illegal supply; on the contrary, it has incentivized it by introducing a structural regulatory inconsistency that weakens the effectiveness of prohibition. By allowing online sports predictions – which, from a substantive perspective, share essential elements with other gambling activities, such as plural participation, competition, and patrimonial exposure to an uncertain outcome – a normalization effect of online gambling is produced in the digital environment, eroding in practice the boundaries between what is permitted and what is prohibited. Ultimately, when prohibition coexists with exceptions that replicate the same economic logic of gambling and, in addition, lacks real enforcement capacity, it not only fails in its purpose but ends up indirectly legitimizing the ecosystem it seeks to eradicate: the black market ceases to be an anomaly and becomes the rule. In practice, the average user does not
distinguish between legal categories, but between functionally equivalent gambling experiences. Likewise, the regulatory framework itself admits exceptions that relativize the prohibition of gambling, as certain non- profit entities – such as the Junta de Beneficencia de Guayaquil 7 are legally authorized to operate such activities. These types of exceptions create incentives to structure mechanisms that, in practice, allow the formal prohibition to be circumvented, further weakening its effectiveness. Finally, prohibition is also inefficient from an economic perspective for the state. As an unregulated activity, it prevents the establishment of a specific tax regime capable of capturing the fiscal revenues derived from its exploitation. Consequently, the costs associated with controlling and potentially repressing the activity must be financed through general taxation – such as income tax or value-added tax. In the absence of sufficient capacity to sustain such efforts, the foreseeable outcome is the consolidation of the black market, with the corresponding adverse effects for both the State and consumer protection. 3. Monopoly and restricted licensing Some jurisdictions have moved away from prohibition and have chosen to allow online gambling. However, instead of liberalizing the market, they have opted to replace prohibition with monopoly models or artificially restricted access regimes, with an excessively limited number of licenses. This model is often justified under a simplistic logic: it is easier to control one – or a few – than many. Underlying this premise is the equally mistaken idea that the size of the market can be contained by decree. However, in an activity characterized by persistent demand, such as gambling, this approach proves to be counterproductive. When legal supply is limited, uncompetitive, or incapable of meeting demand, users do not stop gambling: they
6 See www.imgl.org/publications/imgl-magazine-volume-3-no-1/online-gambling-taxes-in-peru-and-ecuador/ 7 The online sports betting and casino website bet593.ec is operated by the National Lottery, a branch of the Junta de Beneficencia de Guayaquil, a non-profit entity expressly authorized by law to conduct gambling activities. In recent years, however, other non-profit entities lacking specific legal authorization to engage in such activities have begun offering gambling services under the argument that the proceeds are allocated to charitable purposes. This practice further confirms that prohibition does not halt expansion.
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IMGL MAGAZINE | JUNE 2026
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