Brazil sportsbetting regulation set to raise billions for government

Sportsbetting in Brazil is still awaiting regulation. Once this happens it should move activity of around US $2.35 billion and unleash billions in licensing fees and taxes for the government.

The only tax collected by the government currently comes from financial operations in the sector. The Ministry responsible for gambling claims that “regulation of the sector is still under study”.

Provisional Measure expected

It is reported that President Luiz Inácio Lula da Silva‘s administration is working on a new Provisional Measure (PM) on sportsbetting. The Ministry of Finance has submitted a report to the cabinet which is simply waiting for President Lula da Silva’s sign-off. Once signed by the President, the PM will need to be approved by Congress within 60 days to become a ‘power of law’. In the event that this does not happen, it can be extended for a further 60 days before it becomes obsolete again.

The PM on sportsbetting is expected to be published this month. A regulated market in Brazil will mean that unregistered operators that acquire a licence will no longer be permitted to advertise or sponsor footballers or clubs. This is expected to have a huge impact on offshore operators.

With the new PM, operators will be given a six month grace period to formalise businesses in Brazil. A regulated market also means that companies would be required to pay 10 percent of  income in taxes and licences over and above regular tax rates that apply to company profits.

Government will raise taxes

The government’s technical team is expected to finalise the draft of the text and forward it to the parliamentary advisory which can make political adjustments in order to help gain further backing for the bill as it goes through Congress. The government wants to raise taxes via regulation and combat corruption in sports following an investigation into allegations of corruption in Brazil’s Series B football league.

Sportsbetting in Brazil

Once the sector is regulated, the online sportsbetting market is expected to reach US$182.1 billion in revenues by year end 2030.

The law was first signed by President Michel Temer is 2018 when it was proposed that online sports betting would be regulated within four years. The deadline expired in December 2022 with no regulation in place yet.

Former President Jair Bolsonaro spoke often about regulating the Brazilian sportsbetting market but there was even strong opposition from his own administration. There is pressure to speed up the new law as tax collection may not be reflecting the volume of business taking place.

Brazilian football championship

There are 40 Series A and B Brazilian championship football clubs of which 37 are supported by online bookies and gaming operators. The sponsorship enables the teams of the most popular sport in the country to be financed by around US$ 5.85 million per year for a single team.  Acquiring space for advertising on the football pitch is challenging as the race to get the best spaces is very competitive.

Online sportsbooks that operate in Brazil are usually regulated under different jurisdictions. There are seven million registered users with major bookmakers in Brazil. According to surveys, Brazil has the potential for 30 million gamers. Most operators and users are in favour of a regulated sportsbetting market.

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