While the federal government has not yet completed the regulation of sports betting, states like Rio de Janeiro and Paraná have tried to get ahead of the game. They adopted measures that would increase revenue, such as defining a value for grant payments and applying a percentage on revenue lower than what would be provided for in federal legislation.
The movement did not go unnoticed by the Ministry of Finance, which appealed to governors to await the final details of the federal law.
Members of the department assess that the rule is already implicit in the law sanctioned by President Luiz Inácio Lula da Silva in December. The federal government fears a war between states to attract ‘bets’ (as the operators are called in Brazil).
By March, at least three new ordinances must be published with guidelines for auditing, advertising and registration opening companies for bets interested in regularizing in the country.
Local action
The states' movement was not accidental. In addition to the national license, which authorizes a company to have its website operating in the country, the ‘bets’ may choose to purchase only a local license. In this case, however, the company's operations would be restricted to the federation unit where it registers: only bettors who reside in that state or are there will be able to access the betting platform.
Territorial delimitation will be controlled through georeferencing of IP addresses (device identification), both for cell phones and computers. A player who is in Rio de Janeiro, for example, will not be able to access a website licensed to operate only in São Paulo.
The granting of state licenses may have its own rules, such as grant value and earnings rates lower than national rates, in addition to its own advertising rules in local contexts.
According to federal law, an online betting company that decides to operate in the country will have to pay R$30 million (US$ 6m) to obtain an operating license. It also provides for a 12% tax on the amount collected by companies after deductions.
These amounts may be lower for state governments. However, federal legislation will need to prevail in non-financial aspects. Just as a company with national authorization cannot be prohibited from operating and advertising in a state.
“As of the third published decree, which should be published by next month, we will set a deadline in which some national rules will come into effect for all companies. They will need to follow national advertising rules, for example, and payment methods accredited by the Central Bank, even if they have a state license,” said José Francisco Manssur, special advisor to the Ministry of Finance.
However, as the Ministry of Finance has not yet opened the national authorization deadlines, the federal government has warned that, for now, companies without licenses can continue to operate and carry out advertisements normally anywhere in the national territory.
A technical note from the Treasury made it clear that states cannot apply sanctions or require state registration of a betting company now. The ideal, according to technicians from the department, is that any local regulation should only be made after federal regulation.
“The regulation of state lotteries is the responsibility of the states, as long as the limits imposed by federal legislation are observed,” says the Finance note.
The state of Paraná, for example, has already launched a notice to accredit interested companies. Five companies were authorized, and each paid R$5 million (US$ 1m) to explore the virtual activity for five years, within the limits of the Paraná territory. The process is legal. However, the state government cannot prohibit another unlicensed company from operating in the state until the national grant is commercialized.
“We simply carried out our accreditation opening process, through a widely publicized notice, with lottery companies interested in working within the limits of the state of Paraná, as permitted by legislation,” said the note from the Paraná government.
In the text, the state recalled that the state government created in 2021, after the decision of the Federal Supreme Court (STF), Lottopar to regulate and monitor lottery operations, in addition to granting licenses for companies to explore lottery modalities.
In Rio, the grant is R$5 million, for a five-year license, and taxation is 5%, for example.
Focus on fundraising
In a statement, the Rio government said that the notice launched by Loterj for the accreditation of betting houses was prepared in compliance with federal legislation and no new rules were created.
“The objectives of the notice are to enable the expansion of the gaming market legalized by the Union and, consequently, increase our revenue, since 70% of Loterj’s profits are donated to social actions throughout the state of Rio de Janeiro,” says the text.
“States can have lotteries, what they cannot do is legislate national rules. Federal law always has greater command. They cannot, for example, create a rule that allows the company to be authorized outside the state, a state lottery has to be sold exclusively within the state,” said the president of the National Gaming and Lottery Association, Wesley Cardia.
He also recalled that the choice for a state or national license will depend on the strategy of each betting platform: “The company will buy the national license if it is interested in exploring the brand nationally, but a smaller company, with a local interest, can choose a cheaper license. Because it’s not just the value of the license, it’s the cost of national or local operation, influencers, advertising, maintenance.”
In total, 134 companies have already expressed interest in the Brazilian market, a number above the Ministry of Finance's initial expectations. They will have priority in analyzing documentation and releasing activities by the department, responsible for regulating games.
Around 300 websites have already been identified in operation in the country, but more than one domain may belong to the same company.
The registration window must open twice a year and will be available for a few weeks. The company that misses the period or has the request denied will become illegal.
To be authorized to operate in Brazilian territory, the company will first have to hire a government-accredited laboratory for an adequacy analysis and issuance of a certificate of compliance with the rules established by law. It will be like a kind of external audit. The betting house must have its headquarters and be incorporated in Brazil and have a Brazilian as a partner.
In addition to charging the grant and the company's revenue, there will be a 15% payment of Personal Income Tax (IRPF) on the net value of the prizes, in the case of bettors.
According to the law, minors under 18 will not be able to place bets. According to initial calculations by the Executive, the taxation of virtual games and betting should allocate at least R$10 billion (US$ 2bn) to federal public coffers this year.
Source: O Globo
