Brazilian Government Finalises its Regulation of Betting Industry

Several years after sports betting was legalised in Brazil under a somewhat rudimentary set of rules, the Brazilian Government announced that it is set to roll out its far more detailed and unequivocal set of regulations for the betting industry within the country.

Although most of the documentation refers to sports betting, it is also relatively safe to assume that these rules will also apply to sites offering esports betting in Brazil too.

60-day to 120-day evaluative period

The provisional notice for the changes means that they will in effect become law for a 60-day period.

This can then be extended for a further 60-day period as the changes are evaluated.

After this lawmakers in the country can decide whether to pass the regulations into law, as seems to be the most likely case, to discard the changes, or edit and amend them in some way.

Key changes and regulatory adaptations

The changes are sweeping and numerous and seek to eradicate any ambiguity within sports betting and associated industries within Brazil.

Headline changes to the current regulations include:

Tax

• 16% Tax on Gross Gaming Revenue (total revenue from all games minus prizes paid to players)
• Income tax to be charged at 30% on players’ wins above US$425

Organization

• A new organization is to be created by the Ministry of Finance which will be responsible for approving or declining companies’ credentials to offer betting services in Brazil, the monitoring of the number of bets made and how much revenue is being recorded within the Brazilian betting industry.
• Only companies that are accredited by this new organisation will be allowed to offer sports and esports betting within Brazil on ‘official sporting events’.
• Unlicensed operators will have a blanket advertising ban, including on social media, imposed.
• Accredited companies will have to adhere to the National Council for Advertising Self-Regulation rules regarding ethical and responsible marketing practices when advertising.
• Companies that are given accreditation will be expected to conduct gambling awareness campaigns to help reduce and prevent problem gambling.

What will this additional tax revenue be used for?

The new regulations also state that the 16% in tax revenue raised by these proposals will be spent in the following way:

• 10% will be used for social security
• 2.55% will be used by the National Fund for Public Security specifically for projects and investigations into match-fixing, money laundering and other criminalised acts that are related to the betting industry
• 1.63% will be distributed nationally to different sports clubs
• 1% will be allocated to the Ministry of Sports
• 0.82% will be allocated to public schools

There had been talk of a demand from the Brazilian Football Federation (CBF) for a 4% share of the total betting tax revenue raised to be distributed to its clubs for image rights use, but this has been removed from the current document.

This does mean that betting companies in Brazil will see an 11% increase in tax to be paid based on their revenue compared to the original 2018 regulations which saw the betting operator pay just 5% in tax.

It is going to be interesting to see how these changes affect sports and esports betting sites in Brazil and also whether the regulation of the market has the beneficial outcomes that everyone with an interest in the gambling industry in Brazil would want.

Featured image credit: Mihai_Andritoiu via Shutterstock