Posted on: July 25, 2023, 08:18h.
Last updated on: July 25, 2023, 12:46h.
Brazil's regulated sports betting market is closer than ever to the finish line, with only one hurdle remaining. On Monday, President Inacio Lula da Silva signed off on the legislation that will bring the market to life in the country.
That signature on Provisional Measure 1182 arrived seven months after da Silva took office, bringing to an end the procrastination of his predecessor, former president Jair Bolsonaro. With it, the government was able to publish the framework in the Official Gazette and make them legitimate.
There's only one more step necessary to solidify Brazil's place in the global regulated sports betting market. The National Congress, within the next four months, has to review the rules and decide if they're working properly.
Ministry of Finance Provides the Catalyst
Brazil has been trying for several years to introduce regulated sports betting. The first hurdle it had to jump was a law that gave exclusivity over almost all gambling activity to the government.
That was achieved when the Ministry of Finance pushed the provisional measure forward, stripping the “exclusive” language from prior legislation. At the same time, the agency laid out what it envisioned should be the taxation and day-to-day operations of the market.
Operators are going to have to pay a tax rate of 18% – 2% higher than previously suggested – on their gross gaming revenue (GGR). This is in addition to the license fee, which could cost around BRL30 million (US$6.3 million).
The taxes and licenses are only part of what will eventually make up an operator's expenses. From the GGR, calculated after paying out any winnings and income tax, the operator will have to give certain percentages to social security, education, athletic programs, and the National Public Security Fund.
Not all operators are going to qualify for a license, either. First, they must run their Brazilian operations out of an office in the country. They also have to show that they are in good financial standing and are not subject to legal investigations anywhere.
The Ministry of Finance will be responsible for issuing licenses and establishing oversight of the market. Currently, according to the provisional measure, there's no limit to the number of licenses that might be available.
Learning From Other Markets
There have been a few changes since Brazil first recommended a tax rate of 5%, and bettors are going to have to keep a close eye on their action. The provisional measure, which the federal government can alter, specifies that bettors must withdraw their winnings within 90 days, or risk losing them.
No one at the partner or shareholder level of an operator can play any role in a sports organization. In addition, no operator will be able to sign broadcasting rights deals for any sports event.
Anyone who works in the sports industry, such as coaches, refs, and athletes, is prohibited from placing wagers on any activity in order to help prevent match-fixing. That prohibition also extends to anyone who works with “fixed-odds lottery systems,” those under 18 years old, and public agents responsible for overseeing the betting market.
There are a number of sports betting operators that have already begun to set up roots in Brazil. If they fail to receive a license and try to offer their services, they're going to face massive fines.
The provisional measure allows for financial penalties ranging from 0.1% to 20% of the operator's revenue, up to BRL2 billion (US$421 million) per violation. Serious fines could also result in the revocation of the operator's license.
Should everything go according to plan, Brazil expects a significant windfall from regulated sports betting. It predicts government revenue of BRL2 billion next year, reaching as much as BRL12 billion (US$ 2 billion) in subsequent years.
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