Damian Martinez of SBC Noticias reports on Ecuador’s governance of gambling, as reforms under the new Organic Law of Sport seek to reorder the market. However, legal experts doubt whether the changes go far enough to address the sector’s legacy issues in South America’s most perplexing markets.
Industry audiences understand that Latin America maintains one of the world’s most fragmented gambling regulatory landscapes, with vastly different systems governing operators and consumer protections from one jurisdiction to another.
Within this fractured environment, Ecuador stands out as perhaps the region’s most unusual market, not because of its gambling laws, but because of the political legacy that shaped them.
In 2011, under the premiership of former President Rafael Correa, Ecuador held a nationwide referendum on a series of economic and social reforms. Among the ten questions put to the public was whether land-based gambling venues, including casinos and gambling halls, should be prohibited.
Approved by a relatively narrow margin of 52%, the Correa administration proceeded to outlaw land-based gambling, closing casinos and gaming halls, prohibiting new retail venues and contributing to an estimated 25,000 job losses across the sector.
The outcome created a regulatory anomaly even for Latin America. Ecuador became one of the few jurisdictions to prohibit gambling in the physical world while allowing online sports betting to evolve in a largely undefined legal environment. More than a decade later, the country is attempting to bring order to that contradiction.
The entry into force of the General Regulations to the Organic Law of Sport represents Ecuador’s most comprehensive effort to regulate online sports betting. For the first time, the country has established a dedicated licensing framework incorporating anti-money laundering obligations, advertising restrictions and supervisory controls for operators wishing to participate in the legal market.
Carlos José Riofrio, Managing Partner of RiofrioBustamante Law Firm, told SBC Noticias that new proposals are an “important milestone but not a completed regulatory settlement that Ecuador needs.”
He argued that Ecuador is “one of the few mixed gambling markets in the world”, maintaining its prohibition on land-based gambling while embracing regulated online sports betting.
“Undoubtedly, the implementation of the regulations is a very important step forward, but in my opinion, it is not enough,” Riofrio told SBC Noticias.
“The main regulatory rules should have had legal standing so that their implementation would provide sufficient security for potential investors.”
His concern is not the arrival of regulation itself, but whether Ecuador possesses the institutional capacity to enforce the changes sought in a consistent manner, or maintain the paradox. The
Measures vs hard realities
The new framework introduces licensing, strengthens obligations relating to customer data protection and restricts influencers from promoting unauthorised betting platforms. Measures proposed seek to establish a clearer distinction between licensed operators and the black market.
Yet Riofrio believes significant weaknesses remain.
He is particularly critical of the tax reporting requirements, which oblige operators to report every individual player transaction rather than submit consolidated monthly reports. In his view, the requirement substantially increases administrative costs without delivering a corresponding improvement in regulatory oversight.
The cost of market entry also raises concerns. The Single Operating Licence carries an annual fee equivalent to 655 unified basic salaries, a level Riofrio considers excessive. Unless the authorities actively suppress illegal operators, he argues, the licence risks becoming little more than another tax on compliant businesses.
“If illegal gambling is not combated in exchange for what is paid for said licence, it will remain an additional direct tax without any benefit for those who pay it,” he said.
Despite these shortcomings, Ecuador remains an attractive proposition for international operators.
With retail gambling prohibited, virtually all consumer demand has shifted online, creating favourable conditions for companies capable of competing in a regulated digital environment. Businesses with established compliance frameworks may find significant commercial opportunities as the market formalises.
Yet the opportunity comes with a familiar Latin American qualification: the illegal market remains firmly established, and taking advantage of existing laws in plain site.
Licensed operators have been granted a 90-day window to obtain authorisation, while secondary regulations continue to be developed. Once licences are issued, the true test will be whether regulators possess the resources and authority to supervise operators of all sizes and take meaningful action against those operating outside the legal framework.
Tax gift to bad actors
Another point of contention is the new 15% withholding tax on player winnings. Many operators have absorbed the tax themselves rather than pass the cost onto customers. Yet the government has provided no enforcement against illicit operators who have grown fast networks to attract consumers.
A stark reality, Riofrio warns, as tax differentials will continue to incentivise players to seek higher returns outside the regulated market.
Ecuador, therefore, finds itself at an important crossroads. It has constructed a regulatory framework where previously there was none, yet it still lacks the institutional strength and legal certainty associated with mature regulated gambling markets.
Riofrio believes the next phase should include a dedicated gambling law, a review of licence fees and a far more aggressive strategy against illegal gambling. He points to Argentina’s enforcement model, Colombia’s institutional development and El Salvador’s regulatory cooperation with licensed operators as examples Ecuador could draw upon.
Enforcement stand-off
Ultimately, Ecuador’s regulatory gamble is straightforward…The state must convince operators that the cost of compliance is justified by meaningful regulatory protection, while persuading consumers that the legal market offers greater security, reliability and value than its illegal alternatives.
Without robust enforcement, Ecuador risks formalising only part of its online betting market while leaving the remainder beyond the reach of regulation.
Riofrio believes the next phase should include a dedicated gambling law, a review of licence fees and a far more aggressive strategy against illegal gambling. He points to Argentina’s enforcement model, Colombia’s institutional development and El Salvador’s regulatory cooperation with licensed operators as examples Ecuador could draw upon.
Ultimately, Ecuador’s regulatory gamble is straightforward. The state must convince operators that the cost of compliance is justified by meaningful regulatory protection, while persuading consumers that the legal market offers greater security, reliability and value than its illegal alternatives.
For Riofrio, however, the success of Ecuador’s reforms will be determined not by the regulations themselves, but by the state’s willingness to enforce them.
“Strong control in this regard would minimise this situation and generate sustained growth that benefits the entire sports betting ecosystem.”
