'Catastrophic' Peru Turnover Tax Threatens Viability of Regulated Market, Warns Lawyer

• A newly implemented 1% consumption tax on all betting turnover is threatening the viability of Peru’s regulated online gambling market, according to a leading local lawyer.
• Legal expert Nicolás Samohod Rivarola has described the tax’s impact as “catastrophic” and argued it is likely unconstitutional as it is “confiscatory.”
• The tax is levied on every bet placed, on top of an existing 12% tax on GGR, which operators claim effectively doubles their tax burden.
• Operators now face a lose-lose choice: pass the tax to players and risk them fleeing to the black market, or absorb the cost and become unprofitable.
• The measure has been heavily criticised for undermining the otherwise well-regarded regulatory framework developed by the gaming authority, Mincetur.

Peru’s nascent regulated online gambling market is facing an existential threat just months after its formal launch, with experts warning that a new turnover tax could destroy the legal industry and hand the market to unlicensed operators.

The controversy surrounds a 1% selective consumption tax (ISC) levied on the value of every single bet placed. The tax, which came into full effect on 1 July, has been described in the strongest possible terms by local legal experts. Nicolás Samohod Rivarola, founding partner of Samohod Lawyers, warned that the impact of the tax will be “catastrophic” for the market’s future. “We are talking about the very permanence of the activity in the market,” Rivarola said. “That is how apocalyptic the impact of the ISC would be on the Peruvian market if it remains as it is currently.”

The Operator’s Dilemma: A Lose-Lose Position

The core problem with the ISC is that it’s a tax on turnover, not on profit (GGR). It is applied on top of an existing 12% tax on GGR, a combination that operators like Gonzalo Perez, CEO of Apuesta Total, have said will double their overall tax burden. This places licensed businesses in an impossible position:

1. Pass the cost to the player: This would mean a player’s stake is immediately reduced by 1%, making the betting proposition significantly less attractive than on black market sites, which have no such tax.
2. Absorb the cost: As Rivarola warns, if operators assume the burden themselves, “the margin of the business will be so small that investment will be discouraged as well as the economic-financial planning of any business model.”

In either scenario, the only winner is the illegal market, which becomes far more competitive by default.

A Potentially Unconstitutional Measure

The industry is now exploring legal challenges, with Rivarola stating his belief that the tax is unconstitutional. “In my opinion, the ISC for sports betting and/or remote gaming in Peru, as structured by the Congress of the Republic and by the Ministry of Economy and Finance, constitutes an unconstitutional tax because it is anti-technical and confiscatory,” he explained.

Undermining a Well-Regarded Framework

What makes the situation particularly frustrating for the industry is that it undermines what is otherwise considered a very strong regulatory framework. The technical and licensing regime developed by the official regulator, the Ministry of Foreign Trade and Tourism ( Mincetur), has been praised as one of the best in Latin America.

However, this damaging fiscal policy, driven by other government departments, threatens to undo the decades of work that went into formalising the market. Rivarola described the licensed operators as “heroic businessmen (national and foreign), who seek to make formal companies despite obstacles and adversities.” He concluded with a direct plea to the government: “Please do not abuse them, do not destroy their investments, do not leave their workers on the street without formal employment.”