The Wrong Side of the Latin America Gambling Market: People and Numbers

By 14 February, 2020

The popularity of gambling in Latin America is huge. In 2010, the total gambling revenue in the region was $3.8 billion. In 2015, this figure increased to $5.6 billion, and in 2017 grew by another 10%. This is much higher in compare to online Australian gambling as a whole.

With particular interest, Hispanics, 38% of whom earn $4-10 per day, are related to online network games. In the report of the H2 Gambling Capital research group, South America ranks 5th among continents in terms of the share of iGaming industry revenue (5.7%).

The development of gambling has attracted additional investment in the region. This, no doubt, has a positive effect on the budget. But with respect to Hispanic citizens, things are far from the best.

Hoping to be forgotten

In the summer of 2019, an essay by the photographer Ricardo Moreoz appeared on the net, who spent some time in Venezuela.

According to his observations, people there constantly disappear at hippodromes, in gaming halls, online casinos, participate in an online lottery:

Although people lose more than they win, the illusion of payment becomes more seductive, while Venezuelans suffer the world’s highest inflation and lower wages.

Ricardo questioned the locals and found out that most of the players are unemployed, dreaming of ensuring their existence. They spend the bulk of the gain on daily needs (products, household goods), and the rest is “reinvested” in the gambling.

The psychologist Rosa Garcia from the state of Barinas comments: all this is the consequences of the crisis in the country. According to the National Assembly of Venezuela, at the beginning of October 2017, inflation was 42.55%, which marked the start of hyperinflation. In addition, the number of unemployed is growing in the country, especially among young people (and this is the target audience of online gambling resources).

But the highest unemployment rate on the continent is observed in Brazil: in April 2019 it reached a record high of 13.2%, although by the end of October it fell to 12.4%.

A large percentage of unemployed citizens in Argentina, Puerto Rico, in Jamaica.

For the benefit of the region. What about people?

It turns out that an open policy on gambling is beneficial to the economy of the region, but it harms people. However, it is impossible to say unequivocally that this is so. The expansion of the gambling industry in the face of lack of money clearly provokes people to spend more and more time in the game. And this is the first step towards the formation of gambling addiction, with which the Latin American authorities are actively fighting.

In this regard, the regulatory standards, which are being intensively developed to combat gambling addiction, are more and more reminiscent of crutches that prevent a rapid fall. Until the issue of unemployment is resolved in Latin America, gambling will remain a very attractive prospect of earning.

Moreover – people who are accustomed to making money in this way, it is unlikely to have a desire to go to work. After all, at bets they can “raise” amounts comparable to their wages. On the other hand, strict restrictions on gambling can lead to an increase in the number of offshore companies, which is unlikely to have a beneficial effect on the country’s budget. Take, for example, Uruguay: the popularity of online gambling is high there, but the treasury is replenished poorly, so the country’s authorities even introduced an increased tax rate on the gambling business. This suggests that there are clandestine gambling institutions, and part of the cash flow goes to them.

All of the above demonstrates a simple idea: the regulation of gambling and the “beautiful” figures in the economic reports on the income of online gambling do not positively affect the quality of life of people. And the funds spent by the players may go to the treasury of the state, but they do not make it richer than its citizens. Therefore, the expansion of gambling itself is not at all a way to increase the “wealth” of the region. Without a competent social and economic policy, on the contrary, it can harm the economy.

Positive examples

Not everything is so joyless – there are positive examples. So, Chile today is considered the most developed and stable country in Latin America. In terms of per capita GDP, it ranks 51st in the world and has a literacy rate of 96% (for comparison – in Argentina this figure is 48%, and in Brazil – 51%). The country has a high level of credit confidence among foreign companies.

The gambling industry in Chile is also developing. The main revenue stream is provided by commercial casinos, which were visited by almost 500 000 people this winter.

The red line

Currently, there is a clear dissonance between the attempts of the Latin American authorities to protect citizens from the negative effects of gambling and their activities to expand online gambling. And these discrepancies cannot be resolved by regulating only the gambling business. A competent domestic policy is needed in the region as a whole.

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