Last month, the Brazilian Senate approved a bill aimed at regulating sports bets and implementing taxes, with the government anticipating revenue of 1.65 billion reais ($332.27 million) in 2024. The country previously legalized sports betting without subsequent regulation in 2018, leading to several betting firms, including bet365, Betano, and Betfair, aggressively expanding their presence in the country.
The proposed regulations include a 12% revenue tax for online betting firms and a 15% tax on the winnings distributed to gamblers. Additionally, betting companies would be obliged to acquire a license worth 30 million reais ($6.04 million) to operate within the country.
Although the senate voted in favor of an iGaming ban in the bill, it is by no means a final verdict, because the chamber of deputies still have the power to overturn such a decision. In other words, those who have been browsing through new no deposit bonuses and free spins on NoDepositTracker, may not necessarily need to exclude the possibility of benefitting from such promotions.
Key Points
Senator Angelo Coronel introduced the bill to the senate, featuring the most recent amendments subsequent to its initial approval by Brazil’s Economic Affairs Commission. Despite encountering substantial opposition, the voting session focused on three key highlights. Firstly, the senate opted to remove iGaming from the bill, a significant amendment put forth by Senator Carlos Portinho, gaining support with 37 votes in favor and 27 against.
In addition to eliminating iGaming, the senate has decided to eliminate virtual games and sports betting terminals. An amendment seeking to ban sports betting advertising in stadiums was not accepted. Furthermore, all taxation proposals presented by the Economic Affairs Commission on November 22 received approval. This affirms that the Gross Gaming Revenue (GGR) will be limited to 12%, a reduction from the initially proposed 18%. There have also been adjustments to the taxation on winnings.
Bettors will now face a yearly tax of 15% on net winnings, surpassing the exemption threshold of BRL2,112 (£339/€394/$425). Licensees are also obligated to pay an initial fee of up to BRL30m, granting them the right to operate up to five different brands.
Past Criticism
The criticism from Borges was countered by the Chamber’s president, Arthur Lira, who emphasized that the proposal had already received approval from deputies in September and from the senate, where many aspects of the bill had undergone compromises. Lira pointed out that delaying the vote does not eliminate online gaming but rather encourages a lack of control and potential money laundering.
He stressed the need for regulation of existing gaming platforms to bring seriousness to the sector and prevent issues prevalent issues such as financial crime. Notably, at the request of the Evangelical Parliamentary Front, any reference to physical gaming or casinos has been omitted from the text. However, with the exclusion of online gambling, it is anticipated that the projected taxation revenue will fall short of the original expectations.
Financial Repercussions
Initially aiming for BRL1.6bn, the absence of iGaming could result in falling short of that goal, potentially reaching only BRL700m. This starkly contrasts with the initial expectations based on taxes and license fees.
If the current bill secures approval from the president, 36% of the tax will be allocated to sports, while 28% will be earmarked for tourism. Public safety initiatives will receive 14%, and 10% each will be dedicated to education and social security. Anticipated changes include the adjustment of inspection fees, shifting from being based on the premium paid to lower levels of Gross Gaming Revenue (GGR).
Prospective operators are required to obtain approval from the Ministry of Finance to operate in Brazil. To qualify for a license, operators must have a Brazilian partner holding a minimum of 20% of the company’s capital in the country, and they must also implement the necessary cybersecurity systems.
The Future of iGaming
While the senate decided to eliminate iGaming from the bill, the chamber of deputies still holds the power to overturn this exclusion. This raises the possibility of witnessing the reintroduction of iGaming into the bill.
The removal of online gambling already suggests a potential shortfall in the anticipated taxation revenue. Originally targeted at BRL1.6bn, it is now projected to fall below half of that figure, estimated at BRL700m. This significant difference contrasts sharply with the initial expectations set for taxes and license fees.
