Located in the northern part of South America, Venezuela has a population of 28.3 million people and a GDP per capita of $1,691 as of 2020. The country’s economy has always relied on crude oil, so much so that Venezuela was the world’s biggest exporter of petroleum until the 1970s. The economy began to take a serious downturn during the presidency of Hugo Chávez, resulting in a severe decline in oil production and hyperinflation.
The Venezuelan economy collapsed after oil prices declined in 2014, causing the country’s GDP to drop by about 75% between 2014 and 2019. This led to what can only be described as a humanitarian crisis, which deepened further when the coronavirus pandemic hit in 2020.
Considering this grim economic landscape, it comes as no surprise that more and more locals are beginning to turn to gambling as a way to make ends meet. Venezuelans try to earn a little extra on the side by exploring different options, from back-street wagering parlors and race betting to the lottery-style game Los Animalitos, which is all the rage among locals at the time of writing.
The country legalized gambling back in 1997, but this is not to say that betting was unavailable to Venezuelans before that. Gambling venues operated in Venezuela before 1997 with special permission from the authorities. However, the sector was plagued by corruption and largely dominated by organized crime groups.
The local gambling industry has been far from thriving even after legalization. At the time of publication, Venezuela is home to five land-based casinos, with most other venues having closed as a result of the coronavirus pandemic and the severe economic crisis the country has been battling over the past few years.
Laws That Govern Gambling in Venezuela
Gambling in the Bolivarian Republic of Venezuela falls under Law № 36.254, also known as Ley Para el Control de los Casinos, Salas de Bingo y Máquinas Traganíqueles (Law for the Control of Casinos, Bingo Rooms, and Slot Machines). The legislation took effect in July 1997 after receiving approval from the republic’s Congress.
The law established the Comisión Nacional de Casinos, Salas de Bingo y Máquinas Traganíqueles (National Commission of Casinos, Bingo Rooms, and Slot Machines), a decentralized regulatory body that operates under the Venezuelan Ministry of Finance.
Licensing Conditions for Gambling Operators under Law № 36.254
Other Regulatory Requirements
Taxes Imposed on Licensed Gambling Operators in Venezuela
Licensing Conditions for Gambling Operators under Law № 36.254
Law № 36.254 outlines the licensing regime, requirements, and the taxes imposed on approved licensees. According to the legislation, licensed operators must pay a special contribution to cover the expenses of the regulatory body.
Each licensee must pay this contribution within the first ten days of every calendar month of the fiscal year; otherwise, a default interest rate applies. If a company uses capital from foreign investors, it should never exceed 80% of its capital stock. Candidates with previous criminal records are rejected, as are members of the National Commission and their relatives.
Venezuelan law dictates that casino gaming can be offered only on the premises of five-star hotels located within tourist areas. The country’s central government determines which areas qualify as tourist zones.
Additionally, license applicants who wish to provide gambling services in five-star hotels must submit proof of an investment of at least 300,000 tax units (TU) and operational capital of 200,000 tax units. The licensee must maintain this capital throughout operations or risk losing its permit. Companies seeking to run bingo rooms must provide proof of minimum capital of 100,000 tax units.
Casino gaming and bingo permits are nontransferable in Venezuela. Article 18 of Law № 36.254 states that each permit has a validity of ten years and is subject to renewal upon request. Operators must submit their renewal requests ninety days before their current licenses expire.
Other Regulatory Requirements
Operators who wish to offer casino games may do so only on the premises of five-star hotels provided these hotels have at least 200 rooms. Bingo halls may operate within three-, four-, and five-star hotels or in other facilities with special permission. As mentioned earlier, casino gambling is allowed only within designated tourist areas.
In line with this requirement, authorities must conduct a referendum in the relevant district so residents can decide whether they want a gambling facility in their region. If the majority votes against it, the referendum result is binding.
In the interest of social responsibility, Venezuelan law prohibits operating casinos, slot machine parlors, and bingo rooms near schools, educational centers, churches, hospitals, and health centers. Title V, Chapter I, Article 26 stipulates that the distance between the gaming venue and the facilities listed above must be at least 200 meters.
Operators must implement computer systems to monitor financial transactions and gameplay. The same article states that running gambling facilities in national parks or wildlife reserves violates Venezuela’s Organic Law of the Environment and the Organic Law for Land Management.
It is also important to note that slot machines may operate only on the premises of casinos and bingo halls, alongside the other gambling games offered there. In other words, there are no licenses for operating the machines alone. Article 32 of Law № 36.254 further dictates that regulated slots must feature theoretical return percentages of at least 80%. Venezuelan law strictly prohibits the recycling of gambling equipment and gaming machines.
Taxes Imposed on Licensed Gambling Operators in Venezuela
All licensed gambling operators in Venezuela must pay taxes on their profits. According to Article 38 of Law № 36.254, companies that offer casino games are subject to a tax rate of 10% of their gross gaming revenue (GGR). Bingo halls, by contrast, pay 12% of their gross profits. In this context, gross revenue is the total amount staked by gamblers minus the winnings paid out by the operator.
Additionally, casinos must pay monthly royalty fees of 40 tax units for each gaming table they operate. Nickel slot machines incur fees of 10 tax units each. Under Venezuelan law, operators must remit their taxes and royalty fees within five calendar days of the end of the respective period. The proceeds generally fund programs aimed at improving local infrastructure and tourism.
Casinos and bingo halls are not the only entities taxed. The country also levies a withholding tax of 34% on all player profits derived from gambling. Profits from horse race betting and lotteries are taxed at a lower rate of 16%.
Online Gambling in Venezuela
Venezuela has offered online gambling since 2012, a rarity in countries plagued by extreme poverty, economic collapse, and hyperinflation. In most such regions, the gambling sector is either unregulated or entirely illegal. Venezuela is one of the few exceptions, although no clearly defined legislative framework governs these activities.
Venezuela’s Online Casinos
Crypto Gambling in Venezuela
Venezuela’s Online Casinos
Venezuelan authorities granted two licenses in 2012 to the Casino Bar and CasinoOnAir online gambling platforms based on Isla de Margarita. Both platforms have since ceased operations. Several factors contributed to their closure, beginning with the fact that 96% of Venezuelans lived below the international poverty line, earning less than $1.90 per day as of 2019.
Figures from Statista show that around 72% of the local population accessed the internet in 2017. Nevertheless, internet access is sporadic because of frequent power outages, and it is generally available only in larger cities. People in rural areas rarely, if ever, have internet access.
Despite the absence of locally authorized options, Venezuelans are free to use offshore gambling sites without fear of prosecution. Many foreign operators accept real-money play from the country, and some even process payments in the local currency, the Venezuelan Bolivar (VEF).
Crypto Gambling in Venezuela
Regarding payments, Venezuela is one of the few countries to attempt an official replacement of its nearly worthless fiat currency with a cryptocurrency. In 2018, the nation launched the Petro (PTR) cryptocurrency in an effort to combat hyperinflation.
In April of the same year, the Official Gazette of the Bolivarian Republic published the Constituent Decree on Cryptoassets and the Petro Sovereign Cryptocurrency (Decreto Constituyente Sobre Criptoactivos y la Criptomoneda Soberana Petro). The decree grants the president authority over the issuance and use of cryptocurrency assets in the country.
Venezuela prohibits other virtual currencies, yet it legalized Bitcoin mining in 2020. That same year, President Maduro authorized the launch of a new casino in the capital, Caracas. Located in the prestigious Humboldt Hotel, the casino accepted only the Petro cryptocurrency, effectively legalizing crypto gambling in Venezuela.
Sports Betting in Venezuela
Hundreds of off-course wagering points were scattered throughout Venezuela, but many had to close following the economic collapse. Illegal wagering on sports is regrettably rampant in Venezuela, with some industry experts estimating it is almost 60 times the size of the legal market.
One possible explanation for this tendency involves legislation that restricted individual sports bets to VEF1,000. As a result of the devastating hyperinflation, that amount is equivalent to only a tiny fraction of a U.S. cent (specifically, $0.0000000024029686). The legislation was repealed later, but it had already devastated Venezuela’s legal sports wagering industry.
Another reason why Venezuelans prefer to bet with unauthorized sportsbooks is that they can pocket their profits in U.S. dollars and use them as currency instead of the highly devalued bolívar. In fact, many sports betting parlors in the country take action solely in USD.
Finally, betting on horse races is also legal in Venezuela. It falls under the regulatory remit of the Tourism Promotion Ministry, and, more specifically, its division, the National Superintendency of Equestrian Activities (La Superintendencia Nacional de Actividades Hípicas).
Conclusion
The severe economic collapse and hyperinflation have significantly slowed the progress of Venezuela’s gambling industry. While both land-based and online gambling are legal in the country, economic instability and high tax rates have caused many authorized gambling operators to go bankrupt. Because of this, unauthorized gambling is booming in the country, greatly surpassing the legal market in terms of volume.
On a more positive note, the industry has seen some developments recently, such as the introduction of crypto gambling via the Petro currency. Last but not least, Venezuelans have the option to engage in online gambling activities at offshore-licensed sites that accept registrations from the country and work with either the local currency or the widely preferred U.S. dollar. Hopefully, Venezuela’s gaming sector will see better days once the country emerges from the economic crisis that continues to devastate it.
