This Tuesday (25th), President Luiz Inácio Lula da Silva edited the provisional measure (MP) that regulates the market in Brazil. The text foresees a tax of 18% on the revenue obtained from games, deducting the prizes paid (GGR - Gross Gaming Revenue). The rate is higher than the 16% previously disclosed by the Treasury.
The additional 2 percentage points increased the quota allocated to the Ministry of Sports, which will use the resources to promote youth categories in sports. It was a decision by the president, together with other ministers, taken on Monday (24th).
"We have already been authorized by the executive secretary and by the finance minister to study measures that could slightly lessen the impact for operating companies," said special advisor Francisco Manssur, from the Ministry of Finance's Executive Secretariat.
According to him, one of the options under discussion is to make the grant more flexible – the amount paid by companies for the right to operate in Brazil.
"We had an initial idea of making a grant of R$ 30 million (US$ 6.3m) for five years [to exploit the bets], and we are studying some variables to either reduce the value or increase the period of validity of the grant," he said.
It is also possible that the government offers a menu of grants. "We are thinking about the alternative of making grants variable over time. For a period, a value, for a shorter period, a slightly lower value.”
Manssur points out that, although the rate has been higher than initially planned, the charge in Brazil is still one of the lowest practiced in the world. Among the most relevant markets, only Belgium (11%), the United Kingdom (15%) and Sweden (18%) tax the GGR at a level lower than or equal to that adopted by the Brazilian government. In Denmark and Spain, the charge is 20%. In France, it reaches 54.9%.
"It is necessary to consider that, since 2018, this segment has not collected anything. They were not committing any illegality, but there was no regulation,” said Mansur.
"But we are working to make the market viable," he added.
In addition to taxation of company earnings, the PM also provides for a 30% taxation referring to IR (Income Tax) on prizes received by bettors who are above the exemption range of R$ 2,112 (US$ 445).
The Minister of Finance, Fernando Haddad, has said that the revenue forecast from the taxation of bets is around R$ 2 billion (US$ 420m), an amount that will be incorporated into the budget proposal for 2024, but the real potential tends to be greater.
The Treasury estimates that, once the market is fully regulated, the annual collection will be between R$ 6 billion (US$ 1.25bn) and R$ 12 billion (US$ 2.5bn).
The rule states that 82% of the GGR will be allocated to betting platforms to "cover the cost and maintenance of the operator agent of the fixed-quota betting lottery."
Of the 18% that remain with the government, most (10%) will finance social security. Another 3% will go to the Ministry of Sport, and 1.63%, to sports entities that have explored the brand.
A further 2.55% will be directed to the FNSP (National Public Security Fund) for actions to combat betting manipulation, money laundering and other acts of a criminal nature, and 0.82% for basic education actions.
Prizes that are not withdrawn by the winners within a period of up to 90 days will revert to Fies (Student Financing) until July 24, 2028. After that date, the resources will be collected by the National Treasury and can be used by the Union.
The PM has the force of law immediately, but may lose its effectiveness if it is not approved by the National Congress within 120 days.
The rule gives the Ministry of Finance the power to further detail the rules for betting and fundraising. It also determines that the folder should supervise the activity.
A secretariat will be created in the Ministry of Finance responsible for analyzing documents for approval or not of the accreditation of betting companies in the country. This body will also monitor the volume of bets and collections, as well as take care of supervision.
The PM also prohibits the participation in betting, directly or indirectly, of minors under the age of 18, public agents with attributions related to the regulation and inspection of the activity at the federal level, people who may have "any influence" on the results of the games, such as coaches, referees and athletes, among others.
It is further established that only qualified companies will be able to receive bets related to official sporting events, organized by federations, leagues and confederations.
Companies that explore the betting market without prior authorization from the Ministry of Finance or that carry out activities in disagreement with the authorization granted may be subject to sanctions.
Fines for infractions can vary from 0.1% to 20% of the company's collection volume, up to a limit of R$ 2 billion (US$ 420m). There may be partial or total suspension of activities for a period of 180 days (six months) or even withdrawal of authorization.
The PM also determines that betting companies must promote actions to raise awareness of bettors regarding gambling addiction.
UNDERSTAND THE REGULATION OF THE SPORTS BETTING MARKET
What does the PM provide?
Companies known as bets will pay a rate of 18% on the revenue obtained from games (called GGR – gross gaming revenue), discounting the prizes paid to players. There will also be taxation of 30% referring to IR (Income Tax) on prizes received by bettors who are above the R$ 2,112 (US$ 445) exemption range.
How will the proceeds be distributed?
10% will go to social security, 3% will go to the Ministry of Sports, 2.55% will go to the FNSP (National Public Security Fund) for actions to combat betting manipulation and money laundering. The transfer to sports entities will be 1.63%, and to basic education, 0.82%.
What is the revenue forecast?
The Minister of Finance, Fernando Haddad, has said that the forecast is around R$ 2 billion. The portfolio projects that, once the market is fully regulated, the annual collection potential will be between R$ 6 billion (US$ 1.25bn) and R$ 12 billion (US$ 2.5bn).
What else was regulated?
It is further established that only qualified companies will be able to receive bets related to official sporting events, organized by federations, leagues and confederations. In addition, betting companies should promote bettors' awareness of gambling addiction. It is also foreseen that partners or shareholders of betting companies will not be able to participate in professional sports organizations, nor act as directors of Brazilian clubs.
Who is prohibited from participating in betting?
Minors under 18 years of age; public agents with attributions related to the regulation and inspection of the activity at the federal level; persons who may have any influence on the results of the games, such as coaches, referees and athletes; persons who have or may have access to computerized betting lottery systems; in addition to people enrolled in national credit protection registers.
Are the measures already in place?
The PM has immediate force of law, but loses its validity if it is not approved by the National Congress within 120 days.
Source: Folha de S.Paulo
