Taking advantage of the time of adjustment of the tax matter in Provisional Measure (PM) 1034/2021, the Parliament decided to correct the tax quadrant levied on fixed-odds betting lotteries (virtual and physical), enabling the collection until then non-existent and unlocking a market so promising for Brazil.
Law No. 13.756, of December 12, 2018, has always had a serious problem. The percentages defined in the original text were not in line with the best practices of the international market, which usually tax on Gross Gaming Revenue (GGR), gross revenue less the prize paid to players.
The tax under this law was based on the sum of all money transacted within a bookmaker by the players, that is, the sum of all bets made (turnover). To adjust this correctly, a modification was needed and only the National Congress could do it.
Secap works to correct the fixed-odds betting law
The Ministry of Economy's Secretariat for Evaluation, Planning, Energy and Lotteries (Secap) has done an enormous job in dialoguing and explaining these needs to the legislators who should vote on this change and draft the text of this amendment. This was approved by the House and Senate to become law today (15) with presidential sanction.
For this, the team led by Secretary Gustavo José de Guimarães e Souza, together with the Undersecretary of Prizes and Draws, Waldir Eustáquio Marques Junior, and other technicians from the ministry, explained to the different legislators that the surveys carried out in these years showed that the GGR model has become be the standard approach to taxing online gaming services across much of Europe and, indeed, globally.
For Secap, countries that use taxation on the GGR, gross profit of the operation (which is calculated as: player bets, minus punters' winning bets, minus punters' compensation and bonuses) are able to create a larger market , more efficient, and with a safer system for consumers.
When tax is levied on the sum of all bets placed (turnover) it always generates less competitive betting products and does not attract consumers, compared to operators offering the same products with taxation on the GGR.
Betting consumers are price and product sensitive and, therefore, change operator depending on the competition of betting offers. Therefore, the type and level of taxation significantly influence the size and availability of products in the licensed betting market, and play an important role in the growth, structure and attractiveness of the consumer to the market.
Changes present a new horizon for the Brazilian market
This type of bet is already being explored internationally, in a virtual way, with Brazilian bettors, moving around R$ 2 billion a year, which end up being sent abroad. Fixed Quota Betting is eligible for privatization in the Investment Partnership Program (PPI), and is included in the National Privatization Program (PND), pursuant to Resolution No. 134, of June 10, 2020, of the PPI Council.
One of the themes included by the rapporteur in the text was the change in the distribution of what is collected by the lottery known as “sports betting”. In this type of lottery, classified as fixed-odds, the player tries to predict the result of real sporting events (score, number of cards, who will score the first goal, etc.) in football games, knowing in advance how much he can win in case of a hit .
"The experience in Europe shows that it is better to adopt the operator's gross profit as a basis, providing stable flows of public revenue and prizes and making bettors use the services of local operators," said the MP's rapporteur in the Chamber, Deputy Moses Rodrigues.
Thus, instead of the percentages of gross collection defined by law, now from the total collected, the prizes will first come out, without fixing the amount, the amount of the incident income tax (30%) and the social security portion (0.10% for bets in physical media and 0.05% for those in virtual media).
Before this, the gross proceeds are divided primarily between prizes, lottery operator, National Public Security Fund (FNSP), social security, clubs that have ceded their symbols for the event and schools that achieved performance goals in national exams.
With the new rule, from what is left over from the first division, 0.82% stays with the schools, 2.55% for the FNSP, 1.63% for the clubs and 95% for the lottery operators, which must be bid for exploitation by the private sector.
With the changes sanctioned by the President, Art. 6 Art. 30 of Law No. 13.756, of December 12, 2018, becomes effective with the following wording:
"Art. 30. The proceeds from the collection of the fixed-odds betting lottery in physical or virtual media will be destined to:
I - (revoked);
a) (revoked);
b) (revoked);
c) (revoked);
d) (revoked);
e) (revoked);
f) (revoked);
II - (revoked);
a) (revoked);
b) (revoked);
c) (revoked);
d) (revoked);
e) (revoked);
f) (revoked);
III - the payment of prizes;
IV - the payment of social security contribution levied on the proceeds of the collection at the rates of:
a) 0.10% (ten hundredths percent), in the case of bets on physical media; and
b) 0.05% (five hundredths percent), in the case of bets in virtual media; and
V - payment of income tax on the award.
§ 1º (Revoked).
§ 1-A The balance of the difference between the proceeds of the collection and the amounts referred to in items III, IV and V of the main section of this article will be allocated as follows:
I - 0.82% (eighty-two hundredths percent) to implementing entities and implementing units of public school units for early childhood education, elementary education and high school that have achieved the goals established for the results of the national assessments of basic education, according to an act of the Ministry of Education;
II - 2.55% (two integers and fifty-five hundredths percent) to the FNSP;
III - 1.63% (one whole sixty-three hundredths percent) to Brazilian sports entities that cede the rights to use their names, their brands, their emblems, their anthems, their symbols and similar for the dissemination and execution of the lottery fixed odds betting; and
IV - 95% (ninety-five percent), at most, to cover the cost and maintenance expenses of the fixed-odds lottery operator agent.
§ 1-B The percentage allocated to the cost and maintenance expenses provided for in item IV of § 1-A of this article may vary, provided that the annual average meets the percentage established in that item.
§ 2 The operating agents shall transfer the lottery proceeds directly to the legal beneficiaries referred to in items I and III of § 1-A of this article.
§ 3 The resources referred to in item I of § 1-A of this article shall be applied in funding and investments that contribute to guarantee the functioning and to improve the physical and pedagogical infrastructure of educational establishments.
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§ 5º (VETOED)." (NR)
Art. 7 Item VI of the sole paragraph of art. 9 of Law No. 9,613, of March 3, 1998, becomes effective with the following wording:
"Art. 9º ..................................................................................................................
Single paragraph. ........................................................ ......................................................
........................................................ ........................................................ ..........................................
VI - companies that, by means of a draw, similar method, operation of lotteries, including fixed-odds betting, or other systems for capturing bets with payment of prizes, carry out distribution of money, movable goods, real estate and other goods or services, as well as grant discounts on their purchase or contracting;
Source: GMB
