After Brazil’s Federal Government recently announced its upcoming initiatives to regulate fixed-odds sports betting, marking a noteworthy milestone for the nation, the Brazilian Government has now revealed its comprehensive and unambiguous set of regulations for the betting industry within the country.
A temporary evaluation period
While the majority of the documentation focuses on sports betting, it is reasonable to infer that these regulations will also encompass platforms that offer esports betting in Brazil. The proposed amendments will undergo an initial evaluation period of 60 to 120 days, during which they will be implemented as temporary measures.
Following this initial period, the evaluation can be extended for an additional 60 days as the changes are carefully assessed.
Subsequently, lawmakers in Brazil will make a decision on whether to pass the regulations into permanent law, which appears to be the most likely outcome, discard the proposed changes altogether, or make revisions and adjustments to the regulations.
These amendments aim to bring about significant and comprehensive changes to the sports betting landscape and related industries in Brazil, ensuring clarity and removing any ambiguity.
Noteworthy modifications to the existing regulations include:
- A tax rate of 16% will be imposed on the Gross Gaming Revenue (the total revenue generated from all games, excluding the prizes awarded to players).
- Players will be subject to an income tax of 30% on their winnings exceeding US$425.
- The Ministry of Finance will establish a new entity tasked with evaluating and approving companies seeking to provide betting services in Brazil. This organisation will also oversee the monitoring of betting activity and revenue generated within the Brazilian betting industry.
- Only companies authorised by this newly formed entity will be permitted to offer sports and esports betting on “official sporting events” within Brazil.
- Unlicensed operators will face a comprehensive advertising ban, which includes restrictions on social media platforms.
- Accredited companies will be required to comply with the regulations set by the National Council for Advertising Self-Regulation, ensuring ethical and responsible marketing practices in their advertisements.
- Accredited companies will also be expected to actively promote gambling awareness campaigns aimed at reducing and preventing problem gambling.
Utilisation of additional tax revenue
The newly introduced regulations outline the allocation of the 16% tax revenue generated by these proposals as follows:
- 10% will be allocated to social security initiatives.
- 2.55% will be directed to the National Fund for Public Security, specifically for projects and investigations related to match-fixing, money laundering, and other criminal activities associated with the betting industry.
- 1.63% will be distributed among various sports clubs on a national scale.
- 1% will be designated to the Ministry of Sports.
- 0.82% will be directed towards public schools.
Previously, there were discussions regarding a 4% share of the total betting tax revenue being allocated to the Brazilian Football Federation (CBF) for the utilisation of image rights by its clubs. However, this provision has been omitted from the current document.
Consequently, betting companies operating in Brazil will witness an 11% increase in their tax obligations based on revenue, compared to the initial 2018 regulations, which imposed a 5% tax rate.
The impact of these changes on sports and esports betting platforms in Brazil is eagerly anticipated. Additionally, it remains to be seen whether the market regulation will yield the desired positive outcomes for all stakeholders within the Brazilian gambling industry.
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