In the accounts of the Ministry of Finance, in 2024, R$ 15 billion (US$ 3b) will be collected in taxes from sports betting. The H2 study calculates that this amount does not reach R$ 3 billion (US$ 605m), already including the ISS, which is a municipal tax.
The Provisional Measure (PM) that will regulate sports betting is in the Civil House and should be published in the next few days, stipulating taxation on the so-called GGR (Gross Gaming Revenue), a concept used internationally for this sector. GGR is the difference between what a house earns from betting and what it pays out in prizes.
The Responsible Gaming Institute, an entity that brings together the main foreign houses operating in Brazil and defends their interests, calculates a GGR of 7.18% for the national market as a "reasonable average". To exemplify: imagine that a certain bet received R$ 100,000 (US$ 20,190) in bets for the final result of Fluminense x Vasco. It pays R$ 92,820 (US$ 18,740) in prizes and keeps R$ 7,180 (US$ 1,450) as net income.
It is on this net revenue, the GGR, that taxes are levied. For H2, the Brazilian market, close to reaching R$ 100 billion (US$ 20.2b) in financial transactions, will have a turnover of R$ 6.9 billion (US$ 1.4b) in GGR in 2024 in the hypothesis of a tax burden of 20%. And less than that with greater load, which will be the case.
This amount will be subject to taxes common to all companies (ISS and PIS/COFINS), a 10% tax on the GGR, specific to the sports betting sector, and another 5% for sports, public safety and education, which are already included in the 2021 law. Then, income tax and CSLL are still levied on profits.
Not counting the state ICMS, it would already be a tax burden of something around 34% of the GGR. Considering the optimistic projection of R$ 6.9 billion (US$ 1.4b), that would be a collection of R$ 2.3 billion (US$ 465m) in taxes.
There will also be a tax on players, within the same rule that also applies to all other Brazilian lotteries. Profits from each bet that exceed the IR exemption range will be taxed at 30%.
H2 initially calculated that this would represent more than the equivalent of 11% of GGR (R$ 760 million – US$ 153.5m), but the numbers were based on an IRPF exemption range of R$ 1,903.98 (US$ 221), which has now risen to R$ 2,111 (US$ 426) . Therefore, the withdrawal will be less.
Government is criticized
Professional gamblers have been protesting on social media. They point out that the taxation on them cannot be similar to the Mega Sena, for example, because the operation of sports betting is different.
At Mega, the gambler, when he wins a high amount, pockets the money, transforming it into income. In sports betting, the logic is that the amount of the winning bet covers the losing bets. It is only at the end of a period (a fortnight, a month, a year) that the bettor observes whether he has made a profit on the amount initially invested to withdraw his income. In their view, it is on this withdrawal, when the money leaves his account at the bookmaker and goes to his checking account, that the tax should be levied.
Punters and bookmakers have said that the government's proposal stimulates the informal market. The IBJR cites the same data presented by the Ministry of Finance at the Finance Committee of the Chamber of Deputies a month ago.
In Great Britain, where the GGR is as low as 15%, 95% of the betting market takes place within regular bookmakers. At the other end, in France, where GGR is high, at 55%, only 60% of the market is formal.
In the presentation at the Chamber, the government cited Great Britain as an example to follow and informed that it was proposing a 15% tax on the GGR, but left out of the account the other taxes levied on all Brazilian companies. Betting operators estimate that the tax burden will be 40%, similar to Greece, where taxation is 35% and only 69% of the market is formal.
Source: UOL
