BETTER REGULATION
game. To this is added the application of general taxes such as income tax and value-added tax. The result is a cumulative tax burden that affects both supply and demand. Subsequently, in 2021, through Regulatory Resolution 01-00001-21, the Gaming Control Authority approved the regulation for the granting of online gambling licenses However, more than four years after its entry into force, no licenses have been granted for the operation of online gambling in the country. While various factors may contribute to this situation, the tax burden undoubtedly constitutes a highly dissuasive element. Empirical evidence consistently shows that as tax pressure on the sector increases, so does the attractiveness of unregulated alternatives 10 . In this sense, an excessive tax system does not eliminate the illegal market nor incentivize its migration into the regulated sector; on the contrary, it strengthens it. In economic terms, the consequence is clear: when the cost of legality exceeds its benefits, illegality ceases to be an anomaly and becomes a rational option.
Conclusion Regulating online gambling is a complex and dynamic challenge. In many cases, frameworks designed to mitigate risks have inadvertently strengthened illegal markets. The patterns identified in this article suggest that regulatory effectiveness depends not only on legislative intent, but also on proportionality, market understanding, fiscal coherence, and sustained institutional capacity. Addressing these factors is essential to ensure that regulation fulfills its core objectives: consumer protection, market integrity, and public benefit. In this context, the black market should not be understood as an external anomaly, but as a direct reflection of regulatory shortcomings. When regulation fails to align with market realities or imposes disproportionate burdens, it does not eliminate the activity, it displaces it into spaces where the State loses control, revenue, and protective capacity.Ultimately, the black market is not a failure of the market – it is, in many cases, a failure of regulation.
CARLOS ALBERTO FONSECA SARMIENTO Managing Partner, Gaming Law SAC For information contact carlos@fonseca.pe
10 Consider the recent experience of Netherlands where a sharp increase in gambling tax was widely reported as one of the factors behind channelization falling below 50 percent
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