The latest news is that the Brazilian regulator has finished drafting the sports betting regulation. A provisional measure is about to the introduced by the government, with amendments to Law 13,756/2018. It is still expected for the next days.
Apparently, the regulator will propose the taxes to be increased in 11% on GGR. Considering the other taxes levying on the sports betting operation, a Brazilian sports betting operator would be subject to a tax burden of almost 32% on GGR, besides the taxation on profits. If we include the income tax and the social contribution on net profits, the tax burden would be over 43% on GGR. And this does not take in consideration the impact of the withholding tax on winnings over BRL 1.903,99, at a 30% rate, which will drive most of the VIP players to the black market.
The license fee is expected to be BRL 30 million, for a 5-year license, which makes Brazil probably the most expensive sports-betting jurisdiction to be licensed in the world. Unfortunately, it seems like the appetite for revenues might kill the cash cow before it is even born.
The provisional measure that will be published must be approved, amended, or rejected by the National Congress. Unless the industry put its best efforts to lobby for reasonable taxes and licensing costs, after so many years of expectations we may end up with an impossible regulatory framework. The next 60 to 120 days after the publication of the provisional measure are critical and all operators and associations should gather and join forces for these common goals.
Luiz Felipe Maia
Partner at Maia Yoshiyasu Advogados
