Buckle up, Brazilian gaming law may be accelerating

Posted:: Nov 12, 2021 23:18 Category: Americas , Payments , Regulatory , Posted by Katy

Founding Partner of Online IPS Brazil, a global payment solutions company, Witoldo Hendrich Jr. writes about the state of gambling regulation in Brazil

As a close observer of the twists and turns of Brazilian Gaming Law over the years, I’m tempted to use analogy when asked to describe the state of play, to create the most true picture. Today, the momentum towards establishing updated gambling regulation in Brazil is being driven by a Work Group created by the Brazilian House of Representatives, to analyse the existing Bill of Law #442/1991 and its benefits.

This measure is a kind of like a lost artefact the House of Representatives found in a drawer, a legal antiquity from bygone administrations. It’s as if someone discovered inside grandpa’s garage a vintage 1953 cherry-red Corvette, forgotten under a dusty tarp.

In this scenario, the Chairman, Congressman Arthur Lira, mandated the Work Group to carefully detail and tune-up the Corvette for sale. They need to rebuild the carburettor, replace the gaskets, buff out some rust, and polish to a shining finish. This is exactly what the Work Group is doing right now. They are removing undesired parts, adding new ones and calibrating items such as taxation.

The only thing I could fairly criticize at this time is that our tinkering Work Group is not talking to potential buyers: the industry operators. It reminds me of a recent movie exhibited in Brazil, the Lotex case. Our government thought they had a shiny, smooth driving car, but a cheap, shoddy replacement engine dropped its market value and the purchase was cancelled.

The Work Group is composed of 15 Congressmen, who decided to keep its doors closed to public discussions with the private sector — ultimately, the potential buyers. To be fair, all the Congressmen have been very available when consulted individually, but the deliberations of the Group remain hidden under the hood. For example, on October 20th and 21st, I took meetings with Congressmen Bacelar and Felipe Carreras (separate from the Work Group), together with Luciana (Hendrich Digital Content) and Rui Magalhães and Ana Clara Heeren (both from Estoril Sol Digital), where we conferred about old concerns of the industry, especially related to taxation and consumer protections as terms of a rational equation.

As a tax professor for more than 15 years, I have a special concern about ISS (local taxation over services, which can be assessed by any of the 5500+ cities of the country, based on the consumer location). Naturally, operators have serious concerns about taxation (Turn-Over, GGR, NGR) and potential protocols for taxing the player (a no-go experience around the globe that stimulates the black market operators, always offering higher untaxed profit through non-compliant payment methods).

We put all of this on the table, along with an offer to develop a public hearing and a state-of-the-art educational seminar, just like the one we had the chance to coordinate in 2019 in Rio de Janeiro.
The offer was unfortunately declined by the Work Group. The good news is that it was declined because there was “not enough time for educational events before the end of the year”, meaning they really expected to vote on final legislation before the end of 2021!

Ladies and Gentlemen, the sale of our restored Corvette seems to be around the corner. Sharpen your pencils and stay ready to place your bids.


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