Online Betting: It’s the Consumers’ Turn

The recent inclusion of 25 online betting platforms in the simplified VAT regime for digital services marks a significant milestone: the State now recognizes them as providers of taxable services in Chile. For those that chose not to register, Exempt Resolution No. 94 established that payment processors must withhold and remit the VAT. For years, the debate was whether these platforms should be taxed in Chile. Today, that discussion is starting to be resolved. But this tax progress raises a question that no one has articulated with enough clarity: if these companies are now paying taxes, who is looking out for their consumers’ rights?

Public debate has evolved on taxation, anti–money laundering, and the protection of minors. However, one aspect has remained strikingly absent: the protection of those who enter into contracts with these platforms every day.

Beyond the debate over the legal status of the activity itself — which Congress will resolve — the fact remains that millions of people enter into electronic contracts with companies that provide services, receive money, manage third-party funds, set general terms and conditions, design advertising campaigns, and run commercial promotions. All the elements of a consumer relationship are present.

Consumer protection law is already fully applicable, even while special regulation of online betting remains under legislative discussion. The absence of a sector-specific law does not create a zone free of obligations. These platforms are subject, among other things, to the duty to provide truthful and timely information, the prohibition on misleading advertising, controls on unfair contract terms, the duty of verifiability, and compliance with the terms offered. On top of this are the heightened duties toward consumers in situations of hyper-vulnerability, the use of influencers, and the obligations specific to electronic contracting.

The Electronic Commerce Regulation published in 2021 requires clearly identifying the service provider, properly disclosing the terms of the service, and providing effective customer service channels. Sernac’s guidelines on native advertising and influencers are also fully applicable in a market where much of user acquisition happens through social media content creators.

Comparative experience confirms that these risks are not merely theoretical. In the United Kingdom, the Competition and Markets Authority and the Gambling Commission uncovered bonuses with hidden conditions, disproportionate requirements for withdrawing winnings, retention of consumer funds, and misleading advertising. Several betting operators had to amend their terms and conditions and change their practices. The gambling activity itself was not called into question: what was required was that, like any other provider, these companies comply with the basic rules of consumer protection law and the interpretive criteria set by the consumer authority. Chile should draw a clear lesson from that experience.

This opens up a particularly important space for a Sernac whose activity and management capacity have diminished significantly in recent years. The Service currently has broad powers to enforce compliance with consumer protection law: it can request information, review advertising and promotions, examine standard-form contracts, detect the use of dark patterns (as it already did in 2021), promote Voluntary Collective Proceedings, and bring class actions with effects for all affected parties (erga omnes) and fines of up to US$42 million. It could start by examining basics such as the transparency of welcome bonuses, the conditions for withdrawing winnings, the existence of unfair terms in the terms and conditions, account-blocking procedures, payout times for winnings, or the existence of effective customer service channels.

Online betting is a textbook example of the challenges the digital economy poses to consumer protection. That is precisely the space where Sernac has an opportunity — and a responsibility — to once again exercise the leadership the consumer protection framework needs.

Published column in La Tercera.