Upon sanctioning the law, President Lula vetoed the section that stipulated that prizes up to R$ 2,112 (the first bracket of the Personal Income Tax table) would be exempt from taxation.
The veto was recommended by the Ministry of Finance. In the justification sent to Congress, the government stated that maintaining this section would violate "tax equality."
"It would lead to a different income tax from that observed in other lottery modalities, thus creating a distinction in tax behavior," argued the Executive.
With the veto, a 15% income tax will be levied on the winnings of bettors. For companies, the taxation will be 12% of the amount collected after deductions.
The vetoed sections will be examined by the National Congress. In a joint session, deputies and senators can either uphold or overturn the presidential vetoes.
IBJR’s Official Statement on the Presidential sanction of the Regulation of Fixed Odds Bets - AQF's in Brazil.
A new sector emerges in the Brazilian economy. The Brazilian Institute of Responsible Gambling (IBJR) celebrates the enactment of Law 14,790 by President Lula. This action sets Brazil on a course to begin 2024 with the prospect of structuring a new productive chain in the national economy. The approval of the text not only regulates the betting sector but also officially legalizes the iGaming sector in the country, putting an end to a long wait for society.
As stated on previous occasions, Brazil has the full potential to become an international reference in the online gaming industry. The emergence of this new industry, characterized by innovation and technology, was made possible through the combined efforts of the Legislative and Executive branches, in collaboration with the private sector.
The extensive dialogue has forged a modern text, in line with the best global practices, prompting potential national and international investors to begin their analyses and planning for billion-dollar investments in the country in the early days of 2024. However, IBJR is concerned about the lack of definition regarding the base and calculation method of the Income Tax applied to prizes paid to the end customer. Since the consumer is the reason for the existence of the entire sector, this definition needs to happen swiftly and rationally.
The Institute, from now on, is available to contribute to the development of a sustainable model for this issue in collaboration with the relevant authorities. A poor customer experience, both due to excessive taxation and a complex calculation system, is likely to push consumers into the informal market in the short term.
Finally, the Institute expresses gratitude once again for the dedication of all involved parties in ensuring the regulation of the betting sector and the recognition of iGaming, an already well-established activity in the country.
Brazilian Institute of Responsible Gambling (IBJR)
Official Statement from ANJL on the Presidential Sanction of the Regulation of Fixed Odds Bets - AQF's in Brazil
The National Association of Games and Lotteries (ANJL) welcomes with enthusiasm the approval of Law 14,790, dated December 29, 2023, in the eleventh hour of the year. The text regulates online gaming and sports betting, two forms with millions of enthusiasts in the country.
However, it regrets the vetoes to the first three paragraphs of article 31, which will not bring anything positive to fiscal revenue or the market. ANJL hopes that in 2024, the National Congress can overturn the vetoes, and the Federal Government corrects mistakes when drafting the sub-legal decrees that will allow the implementation of Law 14,790/2023. This, in a more straightforward and pragmatic process, aims to ensure an increase in revenue.
For five years, Brazil experienced the unusual situation of having a law (Law 13,756, dated December 18, 2018) that brought Fixed Odds Bets (AQF's) to light without regulation allowing the Federal Government to regulate, levy taxes, issue licenses, or prevent sites that did not comply with industry best practices from operating in the country.
The recently sanctioned text has retained the explicit mention of online betting, a form of Fixed Odds Bets, along with sports betting, regulating a practice widely explored in Brazil.
ANJL understands that maintaining the heading of article 31 will enable the expected channeling rate of bettors to legal sites, reducing adherence to the illegal market. Article 31 deals with taxation through Income Tax with a 15% rate on net prizes obtained in online bets.
Despite the vetoes, the sanctioning of this law is commendable because it asserts: "If they already exist, let's allow the state to exercise control over them and bring the Brazilian market into modernity." This is a much more sensible approach than allowing them to persist without any government oversight.
This act will attract hundreds of millions in investments to the country, create thousands of jobs, enable the Ministry of Finance to control illegal gambling, prevent the participation of minors, ensure responsible advertising, implement measures to deter participation by individuals addicted to gambling, and grant the "police power" to take down websites that do not comply with legal requirements.
It may seem simple and obvious, but it took five years of debates to reach this day. Common sense has finally prevailed, benefiting the entire Brazilian society.
ANJL will remain vigilant in the ongoing fight for the improvement of regulations, through decrees from the Ministry of Finance, throughout 2024.
National Association of Games and Lotteries (ANJL)
