Brazilian government should regulate sports betting this Friday

Interlocutor from the Ministry of Finance says that there was an indication from the Civil House on the final order of the proposal in Planalto. Signage was until Friday (21st). If there is no decision by then, the expectation is no later than next Monday (24th).

Sought, the Civil House says that the PM is under "final analysis" at the Secretariat for Government Analysis and will be taken to President Lula's dispatch.

President Luiz Inácio Lula da Silva resumed his agendas in Brasília today (21st), after returning from a trip to Belgium and also a quick visit to Cape Verde, a country on the African coast.

The following are the main topics known about the Sports Betting PM:

• The text will be sent to the National Congress as a provisional measure.
   
• The rules reach parliament already in force and the period for approval of senators and deputies is 120 days.
   
• The provisional measure will be signed by the ministries of Finance, Planning and Budget, Management and Innovation, Health, Tourism and Sports.
   
• The objective is to bring more transparency to bets, security to bettors and establish inspection parameters.
   
• According to the Sports Betting PM that is about to be presented, only qualified companies will be able to operate sports betting. Unlicensed companies that insist on the operation will be committing an illegal practice.
   
• Bets will only be valid for official sporting events, i.e. those organized by federations, confederations and recognized leagues.
   
• The creation of a secretariat within the Ministry of Finance is foreseen, which will analyze documents and decide whether or not to approve betting companies. The agency will also work on enforcing the rest of the legislation.
   
• Companies will be taxed at 16% on the Gross Gaming Revenue (GGR) – a term that represents the difference between the total revenue obtained from betting and the prizes paid by bettors.
   
• In other words, the fee will be on the profit of the bookmakers. Part of the amounts are destined to the National Public Security Fund.
   
• The taxation on gamblers provides for the collection of 30% of prizes in Income Tax, with an exemption limit of R$ 2112 (US$ 440) per CPF.
   
• The Ministry of Finance calculates that the Federal Revenue should collect up to R$ 15 billion (US$ 3.15bn) per year with the new regulation.
   
• The new collection will be used for public safety, basic education, sports clubs and social policies related to sports.
   
• Betting operators should also promote awareness and information campaigns regarding the addiction that gambling awakens. The main objective is to prevent pathological gambling disorder.
   
• There is still no anticipation about the rules that will be applied to the advertising and marketing of bookmakers.

Collection

As the market is not regulated, the technicians at the Treasury are working based on projections from entities and associations in the sector. The preliminary forecast is for an annual collection in the range of R$ 6 (US$ 1.25bn) to R$12 billion (US$ 2.5bn).

Still for this year, an interlocutor from the Treasury points to a projection of, “at least”, R$ 2 billion (US$ 420m) right after the regulation.

Finance Minister Fernando Haddad has been defending Brazil's alignment with other countries that have already regulated sports betting. In March, when the economic team was working on the provisional measure, Haddad even mentioned that the sector "takes a fortune of money from the country" without paying any taxes.

At the meeting of members of the Treasury with representatives of the betting sector, there were signs of “various companies” that want to enter the Brazilian market based on the regulation, according to the Ministry's interlocutor. This occurred because these companies can only operate in legalized markets - which is not the case in Brazil.

The expectation, therefore, is also to attract these companies from abroad, in addition to regulating companies already operating in the country.

Proposal

According to the draft of the provisional measure, only companies qualified for the activity will be able to receive bets related to sporting events.

On the list are events organized by federations, leagues and confederations. Those companies that are not qualified will be committing illegal practices.

Taxes

Companies will be taxed at 16% on the so-called Gross Gaming Revenue (GGR), that is, on revenue from all games made. However, the prizes paid to players will not be considered in this calculation.

Whoever is betting pays no tax. Those who win a bet, must pay. However, there is an exemption line, specifically for people who win up to R$ 2,112 (US$ 440) in bets.

Anyone earning above this ceiling will be taxed at 30% Income Tax. The idea is that the process of qualifying companies will be the responsibility of the so-called Secretariat for Betting and Lotteries, which is being set up within the structure of the Ministry of Finance.

PM deadline

After the publication of an PM by the Executive, the initial period of validity is 60 days, extended for an equal period if there is no vote concluded in the Chamber and in the Senate. Without analysis by this deadline, the text loses its validity.

In addition to the PM, the economic team also prepared a Bill on the regulation of the betting market. The Billwill deal with the “structure and administrative processes” for the inspection of this market, as advanced by the interlocutor of the government's economic team.

What companies say

Darwin Filho, CEO of Esportes da Sorte, defends a policy of taxing bettors on their combined capital gain over twelve months.

"The understanding that gambling is a continuous act of losses and gains, so it is necessary to better model the taxation of gamblers. Well-written and implemented regulations bring credibility, legal certainty and long-term planning to corporations interested in exploring the activity in Brazilian territory," says Filho.

Marcos Sabiá, CEO do galera.bet, the company that sponsors the Brazilian Serie A Championship, says that the legislation needs to contain rules to combat illegal activities such as money laundering and match fixing.

The marketing director of Casa de Apostas, Hans Schleier, believes that the regulation makes room for other sports to reach the platforms and makes relations with clubs, entities, companies and bettors more transparent.

"With the regulation, we will strengthen mechanisms to guarantee the safety of bettors and develop safety nets," he said.

Source: GMB