A reduced 12% tax rate for Brazil sports betting was confirmed after the country's Economic Affairs Commission (CAE) approved Bill 3,626/23 today (22 November) while an attempt to remove igaming from the legislation was rebuffed.
The approval of the bill text by the CAE greenlights the bill to go to the Senate plenary. The Senate plenary vote will take place on 29 November, during which sports betting – alongside igaming – could be given the all-clear in Brazil.
If the Senate alters the bill text, it will go back to the Chamber of Deputies for review. The lower chamber approved Bill 3,626/2023 in September.
However it faced opposition from senators including Eduardo Girão and Carlos Portinho. Attempts to remove igaming from the legislation also failed during today’s session, after online casino was unexpectedly added to the sports betting bill in September.
The vote was set to take place yesterday before it was postponed by the CAE. According to the Senate agency on Senado Noticias, one of the requests to postpone was put forward by Senator Girão.
“It is an extremely serious issue, which impacts less privileged people,” said Girão. “We need to be very careful when legislating. It’s not in a rushed way.”
How will the tax be distributed?
In total, 88% of the revenue will be kept by the operator, while 12% will go to the Brazilian government.
Of the taxed revenue, 36% will go to sports. This comprises several associations and clubs, including the Ministry of Sports and the Brazilian Olympic Committee.
The second-highest percentage will go to tourism, at 28%. This will be distributed to the Ministry of Tourism and the Brazilian Agency for International Tourism Promotion. Public safety initiatives will receive 14%, while education and social security will each receive 10%.
The Ministry of Health will be given 1%. A total of 0.5% will be distributed across civil society entities, and another 0.5% will go to the Fund for the Equipment and Operationalisation of Core Activities of the Federal Police.
What does this mean for Brazil’s future regulation?
The bill as approved by the CAE reveals much about the future of sports betting in Brazil. Alongside reducing tax on GGR, the taxation on bettors is reduced from 30% to 15%.
The licence fee is set at R$30m (£4.8m/€5.6m). Licence terms will also be longer, spanning five years.
The value of inspection fees has also changed. It will no longer be calculated based on the amount of premium paid – rather, it will be based on lower levels of GGR.
Budding operators must receive approval from the Ministry of Finance in order to operate in Brazil. To qualify for a licence, operators must have a Brazilian partner who holds a minimum of 20% of the company’s capital in the country. They also must have the appropriate cybersecurity systems in place.
The bill outlines that operators will have to implement identification processes. It stipulates facial recognition technology as a potential method.
“We understand that the proposed measures provide greater security in access to betting and can be an important tool to prevent fraud and, especially in the case of facial recognition, prevent betting by minors, especially children,” the bill text reads.
Unlicensed operators will not be allowed to advertise in Brazil. In addition, B2B partners will be prohibited from providing technology to unlicensed B2C companies. Bonuses will also be banned.
Positive reactions to amendments
Hugo Baungartner, VP for global markets at Aposta Ganha said he was “surprised and happy” at the bill being approved by the CAE, “as a Brazilian and being on the market for more than 25 years.”
“Finally we can see some advance on the gambling market regulation as we all know that the online sports betting market is a reality,” he added.
On the attempt to remove igaming from the bill being rebuffed, Baungartner said he “knew” that “similar attempts” would be made on this front – adding that he believes “some more will be attempted”.
The reactions to the bill have been “all positive”, he added. “I have heard from locals and foreigners. There is still a way to go, but I am confident.”
What are the next steps for Bill 3,626/2023?
Assuming the Senate plenary approves Bill 3,626/2023, it will head back to the chamber for further scrutiny.
After a positive vote there, it heads to President Lula da Silva, paving the way for the market to launch.
Brazil’s sports betting saga
It has been a long and winding road for sports betting in Brazil. In May, the Brazilian government launched a provisional measure (PM) for sports betting, which was adopted by the country’s president. PM No 1,182 was signed into law by da Silva in July.
This meant that Brazil’s 2018 sports betting measures, which had been approved in Law No 13,756, were passed into law. However, the signing of the PM was criticised by the gaming industry, particularly due to the high tax rate on gross gaming revenue (GGR) and restrictions on marketing.
Bill 3,626/2023 was introduced later in the year and amended PM No 1,182. The main difference was the inclusion of online casino in the bill text. However, before it was amended itself, Bill 3,626 kept the controversial 18% tax rate.
Brazil’s ministry of finance published the general conditions for sports betting in October. Those that wish to obtain a sports betting licence in Brazil will only be allowed to operate if they have a subsidiary in the country.
iGB is running a special webinar on 28 November in partnership with IDNow, make sure to catch the latest developments ahead of the on the Senate plenary vote. Register now to secure your place.
