Sports betting has gained widespread popularity as an entertainment option worldwide, and more recently, in Latin America. However, the legal framework of this industry has been a controversial and intensely debated subject in Brazil.
On September 14, the Chamber of Deputies approved the bill regulating sports betting, which also encompasses the content of the Provisional Measure. According to the Brazilian Institute of Responsible Gambling (IBJR), the Brazilian market has the potential to reach R$15 billion per year, with government revenue ranging between R$4 and R$6 billion.
The current text of Bill 3626/23, after passing through the Senate Economic Affairs Committee, stipulates that "bets" must pay a 12% tax on gross revenue, in addition to a 15% Income Tax on bettors' winnings. With the new decision, authorized companies will be able to profit from official sports events organized by federations, leagues, and confederations, including electronic games, such as casinos.
In contrast, unregulated companies will engage in illegal practices and will be prohibited from conducting any form of advertising, including digital media. The regulation also introduces new tools to prevent the manipulation of plays, especially those focused on sports-themed events.
In Latin America, Bill 3626/23 is deemed necessary and satisfactory as it not only combats illegal activity but also provides benefits, consumer protection, and preserves the integrity of sports. It is crucial for governments to recognize the importance of this matter and collaborate with stakeholders for its implementation.
With the growing demand, countries such as Brazil, Argentina, and Colombia are committed to regulating the market to control fraudulent activities and generate taxes, promoting a safer environment for bettors, operators, and sports itself.
In Brazil, betting houses were authorized to operate in 2018 through a law sanctioned by former President Michel Temer. However, rules defining limits and sanctions have not been concluded yet. As a result, companies operate with headquarters abroad, avoiding tax payments. There are reasons for optimism, given the immense potential of the betting industry in Brazil, fueled by the engagement of millions of Brazilians with football.
In Argentina, there is no federal law regulating the market, meaning each province is responsible for determining what is allowed or not within casinos, bingo halls, and gaming machines. In Buenos Aires, for example, licensed betting houses must pay taxes on gross revenue. In 2020, internet-operated games had close to US$8 billion in bets, doubling in 2021 and surpassing US$26 billion in 2022.
On the other hand, Colombia is an example of a country that has made progress in legalizing the sector, being the first in the region to approve a law to regulate online casinos in 2016. According to the National Administrative Department of Statistics (Dane), games grew by 123% in the last five years, and internet-operated bets saw a 67% increase by 2022, driven by the FIFA World Cup in Qatar held last year.
The country established its own market through Coljuegos, the Colombian regulatory body for gaming, with the aim of exploring, managing, and regulating practices not attributed to other entities. This includes casinos, bingo, sports betting, virtual races, national and promotional draws. Regulation has allowed the development of online games as a lucrative business, contributing to local economic growth.
Throughout the past year, Coljuegos recorded record numbers in revenue, bets, and transfers in games in Colombia: in December 2022 alone, the total represented a 26% increase compared to the same period in 2021.
With the slogan "Bet for Health," part of the funds raised goes to the country's healthcare system. In 2022, there was a 42% growth compared to the previous year. Of the total, localized games (casinos and bingo) were the ones that contributed the most, with a 33% increase compared to the previous year.
Latin America sees that certifications will provide players with guarantees of transparency and integrity in the operation of games, contributing to the future of a robust market in attracting different international players and boosting the development of other sectors benefiting from the funds obtained from these practices. Compared to other regions of the world that are more consolidated in the industry, such as Europe, Latin American countries have been recognizing the importance of regulation, bringing transparency, integrity, and security to all involved.
Andre Gelfi
Partner-Director of Betsson Group in Brazil, a global operator of betting and online gaming, and a reference in the global iGaming industry.
