Online sports betting companies have multiplied in Brazil, they are increasingly popular and there is practically no football team that does not have the sponsorship of one of the “bets” on its uniforms or famous players that have not appeared in at least an advertisement
These are signs of the size of a market that, according to experts, moves up to R$ 150 billion (US$ 30b) in Brazil per year, but operates practically 100% informally, without paying taxes.
It is in this market that the government is aiming to increase revenue and meet the goal of zeroing the public deficit next year, provided for in the new fiscal framework. After the federal government's announcement that it will tax the sector, the major players in this market evaluated, as O Globo found out, the proposed federal regulation as positive.
Regarding the tax rate, however, the companies claim that it is equivalent to those practiced in other countries that already charge tax on betting.
Companies estimate that a very high percentage can inhibit legal action and encourage illegality. With high taxation, they say, the activity may also become unfeasible, in many cases, and the estimated government revenue will not materialize.
“The regulation of the activity is extremely welcome. But what should be evaluated is the government's expectation of revenue: the numbers disclosed as potential are not realistic and are based on data with little foundation,” says Darwin Filho, CEO of Esportes da Sorte.
Last week, the Minister of Finance, Fernando Haddad, said that the collection estimates with the new tax on online betting were revised and rose from R$ 6 billion (US$ 1.2b) to between R$ 12 billion (US$ 2.4b) and R$ 15 billion (US$ 3b).
The industry's suggestion is to adopt already established taxation models, such as that of England, where there is no Income Tax levied on the bettor's winnings and there is only taxation on the so-called Gaming Gross Revenue (GGR), the difference between the total volume of bets and the value of prizes paid, of 15%.
Grant of R$ 30 million (US$ 5.95m)
In addition to the taxation of online betting, the government will announce other measures that could generate an annual increase of more than R$ 100 billion (US$ 19.8b) to federal coffers, reducing the deficit of R$ 231 billion (US$ 45.7b) expected for this year, said Haddad. E-commerce sales must also pay tax.
The minister said that he had already met with digital betting companies, who were in favor of regulation to combat illegality. Haddad stated that the new rules will be instituted through a provisional measure (PM), which is in the process of being concluded and should be published soon.
Globo found out from people involved in the negotiations that the rate on gross revenue from games should be 15%, following international standards. As the betting sites are based abroad, the government must charge a grant, the value of which must be R$ 30 million (US$ 5.95m) for a period of five years of activity for companies to settle in the country.
The collection of Income Tax on the winnings of bettors and what percentage will be charged is still being discussed.
As sports betting in Brazil was legalized as a “lottery modality called fixed quota betting”, taxation could be similar to what is already done with lotteries: 30% Income Tax on the amount won in bets above R$ 2,640 (US$ 522).
Below that value, the bettor would be exempt. According to experts, around 90% of Brazilian gamblers play recreationally and would not pay income tax because winnings are below that amount.
Sector numbers are inaccurate because it is practically all informal. It is estimated that it has grown a lot since 2018, when it was legalized by means of a decree signed by then President Michel Temer (PMDB-SP), although, five years later, activities have not yet been regularized.
Crystallized culture
About a thousand online platforms operate in this segment, all with headquarters abroad, in countries such as Malta, Gibraltar, Sweden, Cyprus, Antigua and Barbuda.
Currently, 39 of the 40 clubs in series A and B are sponsored by bookmakers – the only exception is Cuiabá. Last week, the clubs released a letter asking the government to participate in discussions on the new rules for the sector, as there is a possibility that corporate sponsorship of football clubs will be vetoed.
“The digital betting environment has run over the progress of bills that deal with casinos and gaming in Congress. Currently, any citizen accesses and bets on sites based in other countries. It is a sector without regulation, since there is no mechanism to avoid deviations in results, for example,” says lawyer Eduardo Carvalhaes, partner in Public Law at Lefosse law firm.
For Carvalhaes, the taxation and regulation of this segment will bring legal certainty, combat vices and, of course, revenue. He says that the rules will legitimize serious companies, and Brazilians will also place bets more safely, since today they cannot use legal means known as Procon or Common Justice in case their rights are disrespected.
“Today, the intellectual capital and labor are in other countries. With the companies installed in Brazil, we will have the generation and formalization of jobs and legal security,” says Márcio Falcão, representative of the Casa de Apostas website.
Sold as investment
One point that the companies also want to be included in the government's MP is that the advertising that some betting sites do presenting themselves as investment tools is vetoed. On YouTube, there are several videos of platforms selling themselves with this type of marketing.
“Presenting itself as an investment tool is wrong and goes in the opposite direction of what happens in the world. Bets have the connotation of entertainment and fun, they do not have the objective of investment, not least because there are many variables that are not in the control of the bettor,” says the CEO of galera.bet, Marcos Sabiá.
Source: O Globo
