On Monday, 24th July, Brazil’s President Inacio Lula da Silva signed the legislation that seeks to regulate sports betting in the country. José Francisco Manssur shared the news earlier in June, and it’s happening.
Now, there’s only one barrier remaining to cement this move. Congress has 120 days to pass or amend Provisional Measure 1182 (published in the Official Gazette ) and define its long-term status. Regardless, online gambling is now legal and regulated in Brazil!
As most of us expected, the new political regime that took over in early 2023 was determined to make changes. A good place to start would be the gambling industry.
Lula took over at a time when Brazil really needed an economic boost. They quickly realized that citizens gambled, whether it's legal or not. So, money that was initially going up in smoke will now be paid in gambling taxes.
Manssur said:
“Each day that Brazil does not regulate this matter, it fails to collect BRL 10 million (US$2.06 million). We need to create regulations for the collection of these taxes”.
New Government, New Laws, New Taxes
Besides player protection, the main reason for regulation is tax remittance. Under the provisional law, licensed operators will pay 18% in taxes, 2% more than before. That means the Ministry of Sports will get 3% in funding instead of the previous 1%.
To approximate, the total annual income in taxes will be BRL 6 – 12 billion.
License fees will now be more expensive. It will be BRL 30 million (USD 6.3 million). This removes jokers and probable scammers from the equation.
Other than license costs and taxes, operators must set aside some money from the CDG (compiled after deducting winnings paid out and income tax). This will go to education programs, social security and the National Public Security Fund.
A New Regulatory Body Could Be Coming
According to provincial law, The Ministry of Finance will be tasked with issuing licenses and regulating the market.
From what we can gather from Hoje Em Dia, a Brazilian media outlet, the Ministry of Finance recommends forming a new governing body – the National Gaming and Lottery Secretariat. This body will oversee games and lotteries throughout the country.
The ministry also clarifies that not all operators will qualify for a licence. For starters, all operations must be run from Brazil. That means every operator will need a physical office in the country.
Also, the issuance of licenses will involve a lot of scrutiny. The ministry will first check whether the operator has any legal implications. With that out of the equation, they’ll now assess the company’s financial status. Not many will pass!
What about penalties?
The provincial law suggests a 0.1% to 20% financial penalty on illegal operators. But the maximum will be BRL 2 billion (USD 421 million).
Overall, these are exciting times for Brazil. This move sets the pace for the country’s iGaming industry. If everything goes as planned, we will see more investors in the country, which translates to more revenue.