09/01/2024 – 17:19
A new betting law came into force, after being sanctioned on December 30, 2023. It mainly regulates so-called “bets” or fixed odds bets. It is worth highlighting that it is among the government's priorities for increasing revenue.
The text defines criteria for taxation, regulation, monitoring and inspection of the activity and grants powers to the Ministry of Finance to do so. They include: virtual and physical betting, real sporting events, online games and virtual online gaming events.
For payment methods, they must be Brazilian and regulated by the Central Bank, like Pix, for example – the credit card was left out, as a responsible gaming practice and so that the player does not use money that “he doesn't have”.
Most of the rules were approved, but, through ordinances, the expectation is that the government will polish the law and its details. Taxation on betting comes into effect in April.
+ Lula sanctions law regulating sports betting
Tax
See below how the betting tax will work:
- Winning bettors: 15% income tax on the prize;
- Betting companies: 88% of the total collected (excluding the prize) goes to the companies and the remaining 12% goes to the government.
Where does the collected tax go?
Of the total collected by the government, 36% goes to sport, 28% to tourism, 12.6% to public security, 10% to social security, 10% to education, 1% to health; the rest will be shared between civil society, Funapol (Fund for the Equipment and Operationalization of the Federal Police's Core Activities) and ABDI (Brazilian Agency for Industrial Development).
Main requirements of companies
- All betting companies must be based in Brazilian territory;
- Have a member in the control group with experience in games, betting or lotteries;
- And meet technical and cybersecurity requirements.
Better or worse?
In the view of Fabiano Jantalia, founding partner of Jantalia Advogados and specialist in gaming law, the measure is positive.
“The main innovation brought by the new law is the definitive legal regulation of sports betting. Until then, we had Law 13,756, which established the beginning of regulation, from 2018. But it only established the possibility of exploration, but did not define how this would happen. With the new law, it was an effective regulatory framework. With the definition of procedural rules of requirements for obtaining authorizations, general rules that should be complied with and operating agents.”
The text legitimately provides new possibilities for bettors, previously restricted to the results of sporting competitions.
“During the process in the National Congress, this possibility was expanded. You now have fixed odds bets also possible for so-called online games. This opened up the possibility for online casinos and also Jogo do Bicho online to be operated legally.”
What does the sector say?
For Leonardo Baptista, CEO and co-founder of Pay4Fun, a payment institution that offers financial services for Bet365, Betano, 1XBet and Betfair, to name a few, the measure should have taken place in Brazil a long time ago.
“The game should always be regularized in Brazil. This is hypocrisy. We know the game has been around forever. And with the regulated market, this brings a 'baseline', that is, a minimum rule that everyone will have to follow. Either follow the rules or don't operate. Then it is up to the government to monitor what it has put in place.”
Baptista explains that this should attract foreign operators, who did not operate in Brazil due to the lack of regulation.
“Much has been said about the 134 operators who applied for the license. But I believe the magic number is between 150 and 200 operators who will apply for the license. This is a preliminary list and there are a lot of big people who are not on it yet. As in the American market, which is highly regulated. One of the names, to give you an idea, is the Hard Rock Group.”
And what about bookmakers paying more tax?
“With regulation, it will raise the market level. Of course, they will start paying a tax that they didn't pay before. They are required to have a headquarters in Brazil, with a representative here, which gives much more transparency and credibility to the operation. So it’s good for everyone.”
The law still requires polishing and its details will be defined through ordinances, which must occur within 180 days.
“The government needed to approve gaming regulations. Now it is up to the Ministry of Finance to release ordinances for each of the verticals, the areas that impact legal gambling in Brazil. For example, there will be a specific ordinance for payment methods. They will release this asap because they need the money. It’s a big fundraiser for them.”
President Lula presented only one veto when signing the text.
“There is a value at which the player can make a profit and tax will be charged on top of that, but the way the law came to the president, the tax calculation would be annual. Lula vetoed this and stated that the time must be established by the Ministry of Finance.”
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