At the government's request, Congress is close to approving a project that taxes platforms and bettors, in addition to creating rules to make the activity safer, like other countries. There are those who just have fun, but there are also many who lose control and accumulate losses.
There are few numbers on users in Brazil, but, according to a survey by the data analysis company Similarweb (which has acted as an advocate for the sector with the government and Congress), in 2022, Brazil surpassed the United Kingdom (considered the most consolidated) in access to these platforms, which are multiplying and investing more and more in advertising in sport. Between January and December last year, the increase was 75%.
Loophole opened in 2018
The “Future of Online Sports Betting” study, from the Possible Futures platform, indicated that, at the end of last year, one in every three adults who follow and practice sports in Brazil had already made some type of bet online. One in four gambled regularly. In the case of those interviewed between 16 and 29 years old, the percentage who have already tried it reaches 44%.
Sports betting was supported by a loophole opened in 2018 in restrictive gambling legislation in Brazil: so-called “fixed-odds bets” were decriminalized, when the player is told in advance how much he will win if he gets results right.
The market associated with sports has exploded in the country, generating at least R$45 billion (US$ 9.15bn) per year, and arousing the interest of the Ministry of Finance in taxing the activity to help balance public accounts.
A bill was recently approved by the Senate's Economic Affairs Committee (CAE), after passing through the Chamber, and awaits a vote in the plenary. Parliamentarians brought taxation to something closer to the Australian one, and proposed rules to combat compulsive gambling similar to the British guidelines.
For psychiatrist Gustavo Teixeira, it is necessary to create mechanisms against compulsion. He explains that the brain's reward system is activated during betting, which triggers a rush of dopamine, reinforcing the desire to bet more and more.
To reduce the abusive use of betting platforms, Brazilian regulations currently being processed in the Senate establish that betting companies must have measures to prevent compulsive gambling disorder and debt, following international precedents. But it is not very detailed, experts criticize.
A regulatory ordinance from the Treasury currently in force says that companies must have control mechanisms, such as a time limit dedicated to betting and losses, a break period and self-exclusion when the bettor recognizes vicious behavior.
“Despite the similarities, the British system is more rigorous. The Brazilian bill leaves a lot open for the Treasury ordinance. In the United Kingdom, the Gambling Act (Parliament's law that regulates betting) defined some conduct as a crime. Our regulations only provide for administrative penalties, with warnings and fines for legal entities,” says lawyer Luiz Loques.
In terms of taxation, the United Kingdom charges 21% on betting operators' earnings. In Brazil, the Treasury's initial proposal was to tax the platforms' results by 18% and the prizes (above R$2,112) from bettors by 30%.
Parliamentarians reduced the rates to 12% and 15%, respectively, after pressure from entities linked to companies. The government sought a revenue tax equivalent to the Swedish one, but senators preferred something close to Australia's rate, which goes to 15% for platforms in 2024.
Taxation can inhibit
FGV Law professor Gustavo Fossatti points to Germany as one of the few countries that have imposed limits on the value of bets and losses per user. In addition, companies pay 5.3% of revenue, not counting state taxes, which vary from 20% to 80% of revenue.
“Countries like Germany, with robust tax revenue, do not depend as much on this market and can tax aggressively. Brazil depends on revenue, so taxation cannot be so high as to inhibit the sector’s growth,” says Fossatti.
Some countries maintain lower taxation, such as Malta and Greece, at 5%. In the United States, regulated companies pay 0.25% of the amount bet. And there is 24% Income Tax on prizes over US$5,000.
Erlan Valverde, partner in the Tax Law area at TozziniFreire Advogados, says that the license to operate in this market also varies. In New Jersey, in the USA, for example, operators have to pay US$100,000, with an additional fee for each renewal. In Spain, the cost can reach €50,000.
“These are values much lower than the R$30 million proposed in Brazil (for an operating license, as provided for in the bill). Considering the entry value and high taxation, the government's proposal may discourage companies from entering the legal market, reducing the tax revenue to be obtained.”
Source: O Globo
