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Context and growth of the betting market
In recent years, the betting market in Brazil has experienced remarkable growth. According to recent estimates, about 18.7% of the 18+ population has placed or currently places bets in some area, whether in sports, online casinos, or other modalities. This percentage reflects a global trend where digital entertainment, including betting, is becoming increasingly popular and accessible.
With the rise in popularity, the need for robust regulation has also grown. Before the new legislation, the betting market in Brazil operated in a kind of "gray area," without clear rules to protect consumers or regulate the activities of companies. This led to a scenario of legal and fiscal uncertainty.
Main changes
The new fixed-odds betting law came to fill this gap, introducing a series of rules aimed at regulating the sector. These include:
1. Taxation: The law establishes a 15% tax on the net value of prizes won by bettors. This taxation aims to increase government revenue, which was already estimating significant revenue loss due to the lack of prior regulation. It is important to note that taxation works under the same principle as income tax: those who earn less than R$ 2,259.20 from the net prize, meaning the difference between the amount bet and the winnings, are exempt from tax.
2. Destination of revenue: A significant portion of the revenue collected from taxation will be allocated to essential areas such as education (10%), public security (13.60%), sports (36%), and tourism (28%). Additionally, 50% of unclaimed prizes will be allocated to FIES (Student Financing Fund) and 50% to FUNCAP (National Fund for the Development of Science and Technology). However, it is not clear how long the amount can remain on the platform before being allocated to these funds.
3. Regulation of operators: Betting operators, whether national or international, must now meet strict requirements established by the Ministry of Finance to operate in Brazil. This includes proof of financial capacity, maintaining a consumer service channel, and complying with advertising rules designed to prevent abusive practices.
Impact on the financial market
The regulation of betting has a direct impact on the financial market and the economy. The formalization of this sector has attracted significant investments, both from established companies and new entrants to the market. It is estimated that the betting market could move around R$ 20 billion annually in the coming years, a substantial amount with the potential to transform entire sectors of the economy.
In addition to the increase in tax revenue, the regulation is also creating new job opportunities. As operators need to comply with local regulations, companies are expanding their operations in Brazil, creating jobs in areas such as technology, customer service, marketing, and compliance. It is estimated that the sector could generate tens of thousands of new direct and indirect jobs, especially in regions that have historically faced economic challenges.
Challenges and future perspectives
While the regulation is a positive step, challenges remain.
One point of debate is the social impact of betting. The law allocates part of the revenue to programs for the prevention and treatment of gambling addiction, but the effectiveness of these measures will still need to be evaluated over time.
However, the outlook is promising. With regulation, Brazil aligns itself with countries that have already regulated the sector and are reaping the benefits of this formalization, such as increased tax revenue, job creation, and consumer protection. The success of the law will depend on its strict enforcement and the government's ability to keep up with the technological innovations that shape the betting market.
Conclusion
The new fixed-odds betting law in Brazil represents a significant transformation for the sector, bringing clarity and security to both businesses and consumers. With the potential to move billions of reais and generate thousands of jobs, the regulation of the betting sector is an example of how legislation can be used to transform and invigorate the economy. However, for these benefits to be fully realized, a continuous effort in education and innovation in monitoring the sector will be essential.
The implementation of the law will not only increase revenue but also contribute to the country's economic and social development.
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Source: 1win Partners
