The big bet: Regulation sparks competition in Brazil
A look at the anticipation of the regulation launch, taxation reduction, and job creation opportunities in the growing market
As the Ministry of Finance prepares the provisional measure for the betting market, Rio de Janeiro and São Paulo are collaborating to draw in players. Back in December 2022, São Paulo took the lead by approving a decrease in the ISS (Tax on Services of Any Nature) from 5% to 2% for entertainment activities. This reduction applies to lotteries, sports betting companies, bingos, and fantasy sports. Pedro Duarte, councillor in Rio de Janeiro and a key player in pushing forward Brazil’s betting sector has disclosed that City Hall has already held meetings with industry stakeholders and the Public Power to explore opportunities to enhance competitiveness.
Commenting on the current 5% tax Pedro Duarte stated: “One of the biggest tourist destinations in the world cannot continue to lose jobs to other Brazilian capitals. Reducing the ISS for a sector that has been in growing demand in Brazil and the world, which works directly with technology, innovation and sports, is an important step for Rio de Janeiro to become competitive, attract new investments and, most importantly, generate new employment opportunities.”
Potential approval of Bill Nº 1822/2023 would match São Paulo’s taxation level
Rio is now following suit and is expected to approve the same reduction in the coming weeks. Minister Fernando Haddad predicts that the regulation of online sports betting will result in a total revenue collection ranging from R$ 2 billion to R$ 6 billion. Rio de Janeiro may soon match São Paulo’s taxation level if the City Council approves PL Nº 1822/2023.
One area of focus is workforce specialisation. Companies have noted the existing expertise in the field, and City Hall is exploring models to further train professionals in this area. This move would be a significant differentiator in the market. In addition, Rio de Janeiro is identified with the creative economy, entertainment, and sports. It is a natural vocation of the city, and City Hall is working hard to showcase Rio’s strengths in these areas.
Duarte remarked, “We are determined to demonstrate that Rio is ahead of São Paulo in these domains.”
Online sports betting regulation predicted to result in significant revenue collection
The competition to attract bookmakers will continue with the training of professionals and the showcasing of additional advantages in Rio de Janeiro with job creation.
Speaking about this Pedro Duarte stated “From an economic point of view, there are several benefits for the city. The first is the collection of the entire operation in Brazil. According to federal legislation, the company will collect taxes (ISS) for the entire operation in Brazil at its headquarters. The second major benefit is job creation. Businesses need marketing, technology, customer service. Naturally, a good part of these jobs are generated in the place where the company sets up its headquarters. And the third point is the development of this sports betting ecosystem, which means more sporting events in the city being sponsored, for example.”
The growth of the sports betting market in Brazil
According to Magnho José, the President of Instituto Brasileiro Jogo Legal (IJL), Brazil is a nation that has a strong passion for football, and with the increasing popularity of sports betting, many people are now not only cheering but also placing bets on their favorite teams. It is estimated that approximately 25 million Brazilians engage in weekly betting activities.
Currently, Cuiabá is the sole team in Série A of the Brasileirão that is not sponsored by any betting companies. However, bookmakers can be seen in various forms of advertising, such as TV commercials, online portals, team shirts, lawn signs, and social media platforms.
Magnho José further stated that the market for sports betting has already reached a movement of around R$ 120 billion in gross values, with approximately R$ 12 billion being allocated towards media expenses and ensuring the profitability of these operations.
The sports betting market in Brazil is on the rise, and the potential for growth and development is significant. As the market continues to expand, it is clear that both Rio de Janeiro and São Paulo are determined to come out on top, showcasing their strengths and unique advantages to attract businesses and investors alike. Overall, the future of sports betting in Brazil looks bright, and it will be exciting to see how the market develops in the coming years.
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