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Online gambling operator Latamwin Group has sued Chile's casino and telecoms regulatory bodies for trying to impose legal restrictions that fall outside their jurisdiction.

Latamwin has accused Chile's Casino Gaming Superintendence (SCJ) in its filing of using third parties to regulate and control the operator, which Latamwin insists the SCJ does not have the power to do. 

In the document, Latamwin’s lawyers list multiple occasions in which the SCJ supposedly overstepped its authority to regulate Chile's land-based casino industry.

In particular, the Chile-facing operator highlights an SCJ resolution from March 14, 2023, which “declared that the legal regime applicable to Chilean casinos is not applicable to gaming and betting platforms, deciding to exclude platform operators from the simplified VAT tax regime”.

It came a year after a program had been put into place in conjunction with Chile's tax authority (SII) to make sure offshore operators were paying the proper value-added tax. 

Latamwin concluded: “The SII, forced by the SJC, incurred a series of legal errors, as we will see in the corresponding section, which resulted in a detriment to tax revenues.”

Subtel, for its part, last September gave multiple Chilean telecomms providers ten business days to block 23 web addresses of popular online gambling sites after a Supreme Court ruling ordered one specific provider (Mundo Pacífico) to block the same sites. 

The legal challenge highlights Subtel’s subsequent statement that “it is possible to infer that the Hon. Supreme Court recognizes the illegality of 23 websites, and therefore its obligation to block is valid for all ISPs and not only for the respondent Mundo Pacífico”, which Latamwin's lawyers argue goes beyond Subtel’s power and was illegal. 

Shortly after, the Chilean telecoms association Telcos announced that all its members would comply with Subtel's instructions, even though only Mundo Pacífico was singled out by the Supreme Court judgment. 

Carlos Baeza, a Santiago-based lawyer who represents Latamwin but did not file this particular lawsuit, told ���ĺ������� GamblingCompliance that the timing of the lawsuit has little to do with the Chilean Senate’s continuing debate over a pending bill to regulate and license online gambling, albeit on less than favourable terms for current offshore operators.

Instead, Baeza said, the intention “is to generate a little more protection and to try to get both the SCJ and Subtel to maintain a more neutral position and not so much of an attack”.

“The idea is a little bit to prevent them from continuing to exceed their powers and making decisions, or developing or executing acts that go against the online gaming industry without having those powers,” Baeza said.

The legal challenge may be unlikely to influence the direction of travel for online gambling regulation in Chile, however.

It is likely that, as it is a civil lawsuit that can take years to process, the market will be regulated before a ruling is made.

The lower house of Chile's Congress passed the pending online gambling in December, and the measure was presented last month to the economy committee in the Senate.