President Luiz Inácio Lula da Silva (PT) partially sanctioned the law regulating sports betting in Brazil. The measure, published in an extra edition of the Official Federal Gazette (DOU) last Saturday (30/12), establishes a 12% taxation rate for companies after deductions.
Companies authorized by the Ministry of Finance, with proven experience in gaming, will have to disburse R$ 30 million for the right to operate for five years. The law also imposes requirements, such as having headquarters and administration in Brazil, with at least one Brazilian holding 20% of the social capital.
Unclaimed prizes will be allocated, half to the Student Financing Fund (Fies) and half to the National Fund for Public Calamities (Funcap). The tax incidence for bettors will be 15% Income Tax on earnings.
Nonetheless, vetoes were applied, including the exemption of taxation for prizes up to US$ 408, which may be subject to analysis and overturning by the National Congress. The law establishes rules, prohibiting individuals under 18 and industry professionals from participating, and now awaits the next steps of implementation and possible legislative adjustments.
The Chamber and the Senate did an excellent job and created an outstanding bill for the regulation of sports betting in Brazil, aligned with international best practices on the subject.
However, it is absurd the presidential veto, which equated betting with the lottery. There is a crucial distinction between betting and lotteries, as it is important to emphasize the recurrence of bets and the profit obtained over time by bettors. The proposed system recognized this reality by determining the collection of Income Tax annually, going beyond a single winning bet.
Bettors now face two unfavorable options: abandon betting or resort to illegal gambling platforms outside the country. Bettor involvement is crucial for the sustainability of the sector, highlighting that without bettors, there are no operators, no game, and no tax collection.
I hope that the National Congress reverses the veto and restores the proposed system, highlighting the need for legal and practical considerations in the development of policies related to sports betting.
Luciano Andrade Pinheiro
Sports law specialist and partner at Corrêa da Veiga Advogados
Source: Exclusive GMB
