Casino Initiative in Ecuador Suffers a Setback
Ecuador’s constitutional court has blocked a proposal that sought to reopen land-based casinos. This prevents the question from appearing on the national referendum planned for December, but doesn't completely cancel the initiative.
LISTEN TO THIS ARTICLE:The ruling represents a significant setback for President Daniel Noboa, who had included the measure among seven questions submitted on August 5 for public consideration. While the court did not dismiss the issue entirely, it determined that the question could not proceed in its current form.
Related: Spinomenal Gains License to Enter Peru's Regulated MarketCasinos in Ecuador were banned following a referendum in 2011, closing an industry that had previously catered to tourism and entertainment. Noboa’s proposal aimed to allow casinos to operate again, but only inside five-star hotels.
The plan also outlined a 25% tax on gaming revenues, with proceeds earmarked for school meal programs and initiatives to reduce child malnutrition. This coupling of casino legalization with social welfare objectives was presented as a way to balance economic growth with public benefits.
The court, however, identified two primary flaws in the wording and structure of the referendum question. First, it concluded that the preamble did not provide sufficient clarity for voters, leaving them without the necessary information to make an informed choice.
The court argued that ambiguity in such a proposal could lead to confusion and undermine the fairness of the referendum process. Second, the measure bundled together three distinct issues: the reopening of casinos, the creation of a new gambling tax, and the specific use of that tax revenue. In doing so, voters would have been unable to express differing views on each component, limiting their ability to give meaningful input on the policy.
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The ruling emphasized that all referendum proposals must meet constitutional standards, including transparency and fidelity to the electorate. By rejecting the casino question, the court signaled its position that voters must be presented with straightforward issues that can be addressed individually rather than packaged together.
Despite the decision, officials indicated that the proposal could be revised and resubmitted in a form that aligns with the court’s requirements. This leaves open the possibility of casino legalization being reconsidered in future ballots.
The rejection marks the second time that Noboa’s administration has attempted to reintroduce casinos through public vote. In January, the president withdrew a similar question from the planned 2024 referendum, citing escalating civil unrest and prioritizing questions linked to national security and the fight against organized crime. That decision delayed any debate on the gambling sector, despite earlier signals that the government was open to reexamining the 2011 prohibition.
While land-based gambling remains suspended, Ecuador has taken steps to regulate its digital market. In 2024, the country introduced a 15% gross revenue tax on online gambling operators, which came into effect on July 1 of that year.
By the first half of 2024, 65 companies had registered to comply with the new tax regime. The same reform package, known as Executive Decree No 313, also imposed a 15% withholding tax on player winnings, further strengthening fiscal oversight of the online sector.
The constitutional court’s decision reflects the continuing challenges faced by advocates of land-based casino legalization in Ecuador. For now, the focus remains on a digital market that has already generated significant regulatory activity.
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