Ecuador will hold a national referendum on November 16, 2025, to decide whether to allow the resumption of physical casino operations within five-star resorts, ending a 14-year ban. The proposal, put forward by current President Daniel Noboa, calls for a 25% tax on casino revenues to fund programs for child malnutrition and school meals. In 2011, former President Rafael Correa implemented the casino ban through a referendum. Experts indicate that Ecuador's casino infrastructure and payment systems are ready, and if the referendum passes, physical casinos could be operational within three months. Last year, the country reformed online gambling, imposing a 15% total revenue tax and a withholding tax on player winnings, providing a precedent for the regulation of physical casinos. Ecuador uses the US dollar as its currency and has a population of about 20 million, but is currently facing social unrest and political challenges.
Referendum Background and Proposal Details
Ecuador will hold a national referendum on November 16, 2025, to decide whether to allow the resumption of physical casino operations within five-star resorts. The proposal, put forward by current President Daniel Noboa, calls for a 25% tax on casino revenues.
The tax revenue will specifically fund programs for chronic child malnutrition and school meals, which are crucial components of the government's social plans.
Historical Ban and Legal Process
In 2011, former President Rafael Correa implemented a ban on physical gambling through a national referendum, ending the operation of legal casinos in Ecuador. This referendum is the first consideration to lift the ban in 14 years.
The Constitutional Court initially rejected the proposal, finding it unclear and containing multiple subjects, but after being rephrased to focus on gambling in five-star hotels, it was approved.
Infrastructure and Market Readiness
Industry experts indicate that Ecuador's casino infrastructure is ready. Juan Carlos Loza Mendoza, Sales Director for Latin America at ProntoPaga, predicts that if the referendum passes, physical casinos could be operational within three months.
The financial ecosystem and payment systems are prepared to handle related cash flows and provide necessary protections.
Economic Impact and Investment Potential
Experts believe the return of casinos to Ecuador will have a significant economic impact. The country uses the US dollar as its currency, simplifying investment and operational processes, and is attractive to international investors.
Although the market size of approximately 20 million people is not large, the dollar-based economy and tourism potential increase market attractiveness.
Social Challenges and Political Environment
Ecuador is currently facing social issues and political unrest, including violent protests triggered by the cancellation of fuel subsidies. The government claims that President Noboa has recently been the target of an assassination attempt.
Experts note that social stability is crucial for the investment environment, and Ecuador could benefit economically from legal gambling once the situation stabilizes.
Online Gambling Reform and Regulatory Precedents
The 2011 ban was only against physical gambling, not online gambling. Starting July 1, 2024, Ecuador imposed a 15% total revenue tax on online sports betting and a 15% withholding tax on player winnings.
The government also lifted the ban on sports betting advertising, indicating an increased acceptance of gambling regulation, providing a regulatory precedent for physical casinos.
Expert Opinions and Industry Outlook
Industry insiders believe that linking casinos with five-star hotels is a good starting point that can bring investment to Ecuador. Ramiro Atucha, former CEO of Vibra Gaming, stated that this model is beneficial for economic development.
Santiago Albán, Executive Partner at Heka Law Firm, believes that online gambling reforms show the government's capability to integrate gambling activities into the formal economy, providing a basis for the re-legalization of physical casinos.
Implementation Timeline and Expectations
If the November referendum is approved, physical casinos could begin operations within the next three months. Rapid implementation is facilitated by existing infrastructure and preparatory work.
The market is expected to initially start operations within five-star resorts, possibly expanding to other qualified venues later.
Regulatory Framework and Compliance Requirements
The proposal requires establishing clear tax, reporting, and compliance obligations to ensure industry transparency and controllability. The 25% tax rate is higher than the 15% for online gambling, reflecting higher expectations for physical operations.
The regulatory model draws on online gambling reform experiences, focusing on balancing revenue generation with social responsibility.
Social Benefits and Fund Allocation
Casino tax revenues will specifically fund social projects, particularly child malnutrition and school meal programs. This targeted fund allocation helps increase public acceptance of the proposal.
Social benefits have become a significant argument in support of legalization, directly linking commercial activities with social development.
International Comparison and Regional Background
Ecuador is one of the few South American countries to fully ban physical casinos, and this referendum is receiving regional attention. South American countries typically decide major policy changes through national referendums.
The country's experience may provide a reference case for other countries considering adjustments to gambling policies.
Risk Factors and Challenges
Social unrest and political instability are major risk factors that could affect the investment environment and operational safety. The government needs to address social issues to create stable conditions for economic development.
Public concerns about the social impact of gambling need to be addressed through responsible gambling measures and strict regulation.
