GMB – José Francisco Manssur is one of the most sought after men in the iGaming sector, as he is responsible at the Ministry of Finance for preparing the regulation of sports betting. How is the process that will culminate in the approval of the sector in Brazil?
José Francisco Manssur – The government sees the segment as a very important one. We took over in January, but since the transition, we have seen that there was a gap and that, despite the fact that sports betting was legal, there was a lack of regulation. In these months we have been carrying out an important job of building regulations. We talked a lot with operators, with bettors, football clubs and other sports that lend their brands to sports betting. And in recent days we have been talking to the National Congress, as this debate is very important for Parliament not to be surprised. We are in the final phase and very close to releasing the regulation.
There are clear signs that the regulation will come through a Provisional Measure and through an urgent Bill. How are these last details being aligned?
In conversation with Congress, we detected that this is the trend. The most urgent issues will be in a Provisional Measure and the others in a Bill with an urgency regime. This is very important, as this is how we dialogue with Congress. They will have the autonomy to verify what has been done and make amendments. This is the closest path to agreement between the Executive and the Legislative.
There is one issue worth highlighting. In the case of a Bill with an urgent regime, after 45 days it locks the Agenda in Congress. Can this help speed up the process and handcuff Congress to resolve once and for all what you have been trying to do since you took office?
Our policy is one of persuasion and not of handcuffing Congress. The urgency regime shows that Congress itself perceives the importance based on externalities, such as non-collection, lack of inspection and manipulation of results. It is a sensitivity of Congress and that is why it is postulating the regime of constitutional urgency. It is not the intention to lock the Agenda, but rather that they have the deadline to present the amendments and look at it calmly, understanding the urgency that the matter has in Brazil.
This process will be delivered to Congress in the form of a Provisional Measure and Bill within how long?
Within the shortest time possible. We need to resolve the latest internal issues and set up a structure at the Ministry of Finance. We need positions and we are dialoguing with other sectors of the government in order to verify, within the responsibility that this government has, of not incurring expenses and keeping the cost as low as possible and of carrying out the tasks with the team that already exists, working in the frame assembly. This is the last step before we can release the texts.
Will it come close to the parliamentary recess?
We have the job of looking at what needs to be processed with the PM regime before the recess and wait for the recess to process the Bill.
Minister Fernando Haddad has already demonstrated his will for this to happen, as Brazil needs revenue. In other words, is it a government proposal?
It is a government proposal. We identified this need in the transition and Minister Haddad has already mentioned it several times and not only regarding the question of collection, which is very important, since all segments make their contribution to taxation so that the government can invest in health, education, housing or security. And it is not fair that this segment, which earns so much, is not taxed. Even operators agree with this, but also so that we can monitor money laundering, match-fixing and the government puts its strength to prevent these problems. In addition, to address the issue of responsible gambling and advertising and to provide assistance to people who have a problem with addiction. So, it is important for the government to act, and to act it needs to regulate.
There is concern from market players regarding the 16% tax on GGR. Has it already been defined that it will be 16%?
Yes. This is the index we work with. Congress may even review it, but this number is very close to that practiced in the United Kingdom, where there is the highest retention (87% of companies operating in that market). So, we got a formula with the Federal Revenue Service, with the Economic Reform Secretariat and the National Treasury, to seek this 16% on the GGR, a fair taxation in relation to other economic activities and which is also not a taxation that distances the operator from the Brazil, but that encourages them to become accredited, because anyone who is not accredited by the deadline to be given in the ordinance will be carrying out an illegal activity and all the operators who are here do not want to remain with that stigma.
But added to the other taxes, could this not make the operation in the regulated market unfeasible?
I do not think so. The aggregate is a matter of false premise. What the whole world evaluates is the GGR. Income tax as an economic sector is paid anywhere in the world. We cannot assume that our companies will be in a tax haven; as UK companies, in addition to paying 15% on GGR, if they are in the UK, pay local income tax. Let's not start wrong and we even have information that they are thinking about revising this. So, income tax is due to economic activity and profit. And it varies. So we take the 16% GGR for granted. The tax, PIS, Cofins and ISS are related to any economic activity and operators could not stay out of it.
With regard to the grant fee, has the value been finalized from the government's point of view?
Already. It will come out in the PM. We discussed a lot with the operators and some even thought it could be bigger. It will be a value that does not exclude and maintains a fair price. The grant fee will cover the costs of the systems that will use AI to verify the manipulation of results, money laundering and the actual collection. We want to monitor the activity in real time and we need to pay for this with the grant amount. It is in the range of R$ 25 to 30 million.
Is seeing a global fair of this magnitude a clear demonstration that it is an extremely important economic activity?
Yes. It gives the exact dimension of the size of the segment and our responsibility in regulating this sector. The government needs to act because with this size of fair it is already a relevant economic segment and the government cannot fail to fulfill its obligation to regulate.
It can be seen at this fair that many of the players also offer online casino games. We know that in the regulation project will come, this will be prohibited. Is there a perception that the possibility for this operation could be opened?
You give me the opportunity to explain. This issue is the subject of Bill 442/91, which is in the Senate. The PM and the Bill do not talk about this matter. This is the prerogative of Parliament to decide autonomously whether it will become legal one day. It is not the PM that will make the activity prohibited. It is already a prohibited activity in Brazil. What exists is a bill to try to legalize this activity and the autonomy belongs to Congress and the government awaits the sovereign decision of Congress on this matter.
So the regulation will only regulate sport betting. Who has another product will not be able to offer it, right?
While a law is not approved and sanctioned, no other product can be offered. We will treat and accredit only the product betting on sports predictions, the so-called AQF, fixed-odds betting.
Source: Exclusive GMB
