Current payments landscape in Latin America and how significant progress has been hard to come by.

Pace of change

It is difficult to over-estimate the impact of the major changes in the Internet poker environment on gaming payments woldwide. The 'Black Friday' indictments in the USA have re-focussed the efforts of PokerStars on its most promising markets outside the US, and while there is significant interest in some Latin American markets, they do not feature in the top two priorities. Full Tilt has, at least temporarily, exited from the stage altogether. Subtly, these changes have made an enormous difference to the whole payments landscape as, being at the cutting edge and clearly in the 'grey zone* of legality in some jurisdictions, it is clear in retrospect that these two companies were the leading drivers of invention and ingenuity around the world. The pressure and urgency of coming up with new ideas for Latin America has dearly reduced, and with it, the noise and pace of change. Maybe next year will be different.

Perhaps the most exciting news is the appointment of a new Emerging Markets Director at Betfair. Historically, Betfair has been careful and given great attention to compliance; however, the company has the muscle and talent to lobby and make a real difference in markets where it has focus.

We can be confident that Betfair will be giving significant consideration to the larger markets in Latin America as part of its global expansion.

Ground principles

It's useful to review the ground principles involved in a discussion of'LatAm' as a payments market.

(1) Viewing the geographical area as a single market or concept is a dangerous trap. We are really discussing a wide range of countries with similar cultures and histories, but extremely local payments practices in various states of development, particularly in traditional banking.

(2) Two languages are widely spoken. Brazilians speak Brazilian Portuguese (which itself is markedly different from European Portuguese). Spanish is spoken throughout much of the rest
of the region, with local variations in vocabulary and pronunciation.

(3) There are several 'common market' type arrangements between diverse groups of countries. However, there is little integration of payment systems.

(4) Controlled exchange rates and internal restrictions are a feature of Argentina and Brazil, the largest two markets in the region; Mexico, by contrast, is a free market as are Peru and Chile, which occupy positions three to five in the league table of regional potential.

(5) There is no commonality whatsoever of regulation. Each country's legal situation has to be reviewed alone, and with great care.


Argentina remains a jurisdiction, or rather, a group of provincial jurisdictions, exploding with potential for Internet gaming. There is a high level of public interest in all forms of gaming and gambling. While land-based casinos are prevalent on the ground, Internet gaming remains highly controversial and jurisdictional disputes between federal and state authorities further muddy waters that are already opaque.

The national banks in Argentina, however, remain unconvinced that there is any premium for them in engaging with any unregulated operator.

Various attempts over the last year to craft workable payment solutions using prepaid cards or vouchers have run into regulatory difficulties. The two largest obstacles are the 'closed loop' credit card structure (meaning that the vast majority of cards issued by the banks are local cards and can be authorised only within the national system for payments to domestic businesses), and severe restrictions on money flows both between resident individuals and outside the country. Little wonder that many wealthy Argentineans have offshore accounts in the United States and try to keep as much money as possible outside the country; this, of course, helps little with the gaming business which suffers great proscription in the US as well.

Twelve months ago, I wrote: "I am not convinced that any large-scale operator is actually turning a profit in the country, but there clearly is a business case for 'being there' in order that competitors don't gain a foothold in any future liberalisation or licensed regime." This remains as true today as it was then.


All of the major banks in Brazil remain gaming-unfnendly, meaning that any attempt to engage in gaming business using traditional banking methods is still doomed to failure. Over the last year, there have been several developments which initially appeared encouraging. However, a bingo bill failed in December, and in April of this year, Caixa Economica Federal, one of the top five banks in the country, began selling lottery products online itself!

From the point of view of offshore operators, this is not a particularly welcome development, as in other countries where r-iz-ks sell gambling products (e.g. Korea), this has traditionally hardened their resistance to commercial competition.

One bright light at the end of the tunnel is that political heads appear to be turning in the direction of Internet gaming as a licensed and taxable activity. There is currently a project before the Brazilian parliament to study poker tournaments; note the emphasis on 'tournaments', as it's a long haul from here to permitting cash games, which are the real prize for this economy. But it's a start.

There is, as yet, no real evidence that the corning of Olympic and World Cup activity to Brazil has focussed any attention on the potential benefits of allowing legalised sportsberting.

There is plenty of gaming and gambling activity in Brazil; much of the payments aspect remains underground. Bingo sites of questionable legality continue to operate; Internet poker participation continues rise, with much how of funds taking place through prepaid card systems of questionable legality. The infamous 'jogo do bicho', perhaps the largest and best organised illegal lottery in the world, continues to be massively popular and the results are openly published on the Internet. A nationwide system of corner shop distributors and runners ensures the flow of funds.

So far as offshore operators are concerned, the taking of deposits continues to be the major issue in Brazil. Reliance on the national invoicing system, 'boleto bancario' or 'cobranza' is widespread, with universal concealment of the real nature of transactions. Ditto for prepaid card schemes, which have enjoyed success. Having received funds within Brazil, an additional frustration remains repatriation of profits, which is strictly controlled by the Banco do Brasil, and operators continue to experience losses of between two and eight percent in the repatriation process which, again, cannot avail of mainstream methodologies.


Mexico continues to stand out as the major success story in the region, though recent publicity surrounding the killing of many players inside a land-based casino as a result of organised crime involvement casts a pall over the industry. Nevertheless, an open, legal and licensed regime has led to the major banks being prepared to facilitate transactions for online gaming companies, and generally, credit cards are not blocked for 7995-coded transactions. A happy picture indeed.

Mexico is also a country of focus for expansion of voucher and prepaid card schemes targeted to the gaming community, and it is anticipated they will have considerable success in a country where there is a growing unbanked but online population.

Other countries

Chile and Peru remain the major markets on the 'B-list', and have attracted increased attention from Internet-based operators over the last year. All indications are that the major banks, BBVA in particular, are open to working with larger operators and appreciative of the opportunities unfolding for them.

There have been negative movements in a number of smaller markets. Ecuador stands out with new laws forbidding all casino gambling, but while the operation of land-based facilities is directly impacted, there is little movement to enforce the proscription of Internet gaming through intervention in the payments market. 2on has also seen rather negative legislative reform in Costa Rica, direct confrontation between operators and the government in Bolivia, Venezuela and Nicaragua, tentative movement towards greater regulation in Peru and Chile, and allegations of government officials being involved in casino-related graft in Mexico. None of these, however, have resulted in any real changes in the payments environment. It is predictable that as proscription takes hold, gaming will simply be driven underground and payment processing will become more inventive for offshore Internet sites.

Last but not least

At the time of going to press, two very encouraging developments had taken place in the USA (of all places), one of which heavily impacts the Latin American market, albeit the Latino market in the USA. Under the relatively new 9754 category for processing high-risk MasterCard™ merchants involved in legal gambling in the USA, a deal is close to consummation for processing credit card transactions for pari-mutuel horseracing and similar transactions for a major offshore wagering operator. And, heartened by this development, we have heard of plans for the first all-Spanish pari-mutuel site dedicated to the LatAm market in North America to be launched later this year.

Throughout the payments arena, from the southern tip of Argentina to the northernmost reaches of Alaska, adversity remains the mother of great invention and ingenuity. The trick is to innovate without falling into the trap of doing anything which could be regarded as bank fraud.
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