President Lula and Minister Haddad’s proposed changes to Brazilian sportsbetting

Lea Hogg 8 months ago
President Lula and Minister Haddad’s proposed changes to Brazilian sportsbetting

A draft proposal  has been co-signed by Brazil’s President Lula da Silva and Finance Minister Fernando Haddad to recommend a tax rate of 15 percent sports betting gross gaming revenue (GGR) according to Brazilian news sources.

It was reported that President Lula and Minister Haddad would like to implement a tax framework similar to the “UK model” where GGR tax will be based on “gross income less the winnings paid to customers.” The proposed draft cites the UK tax model as beneficial to a regulated sports betting market with the strength to achieve “a target rate of 90 percent” for licenced gaming businesses. The drafted proposal also suggests a recommended five-year licence for sports betting operators with an applicable fee of up to BRL 30 million (US $5.9 million).

Supporting the proposed reforms, Minister Haddad believes that a new tax regime for sports betting and instant games could net Brazil’s government approximately BRL 12 billion per year (US $2.1 billion) in taxes.  The increase in government revenues through sports betting is vital to support President Lula’s political manifesto and economic programme.

Should the tax proposal secure its sign-off and approval by stakeholders, “Brazil should obtain a new sports betting decree within the next two weeks”. The Brazilian government maintains its agenda to legalise sports betting in 2023.

Procuradoria-Geral da Fazenda Nacional (PGFN/The National Treasury Attorney General’s Office) is to conduct a review of the main proposals recommended by the Ministry of Finance. If the recommendations are implemented changes to the constitution will be needed. Opinions and comments from all stakeholders that include political representatives and business entities will be gathered by the Ministry this week with a deadline of 16 April. A meeting will also be held in private with the all major football clubs that include Flamengo, Fluminense and Botafogo in Rio de Janiero and Corinthians, Palmeiras, São Paulo and Santos in São Paulo to discuss the proposed reforms.

Confederação Brasileira de Futebol (CBF/governing body of Brazilian football) is demanding a guarantee of a share from the current guaranteed fee of 1.63 percent up to 4 percent of gross revenues to be distributed across football leagues. This will more than double its fees that were last approved in 2018 under the previous sports betting law Ref 13756/18. The government’s new proposed fee is considered to be ‘hefty’ and football clubs and bookmakers are calling out for the fees to be payable in instalments. The government has responded by pledging to work and collaborate with Serie A football clubs to find a resolution on the forthcoming steep rise in betting fees. Further developments of the draft proposal recommend a new tax framework for Brazil’s Instant Games monopoly tender, which has not secured an operating steward since 2019.

Sportsbetting in Brazil

A regulated sportsbetting market in Brazil will mean that unregistered operators will no longer be permitted to advertise or sponsor footballers or clubs. This is expected to have a huge impact on offshore operators who will need to consider applying for a licence in the Brazilian jurisdiction.  Once the sector is regulated, the online sportsbetting market is expected to reach US$182.1 billion in revenues by end of year 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 at that time.

Now there is pressure to speed up the new law as the current tax collection is certainly not be reflecting the volume of business taking place. Implementation of the new proposals is now imminent.

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