Brazil Betting Regulation Coming 'This Month', Says Finance Minister

March 2, 2023
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Brazil is looking to establish regulations for online betting sometime this month, finance minister Fernando Haddad said on Wednesday.

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Brazil is looking to establish regulations for online betting sometime this month, finance minister Fernando Haddad said on Wednesday (March 1).

Speaking with the UOL news agency, Brazil’s finance chief said he had recently spoken to President Lula da Silva about sports betting, and the President is in favour of taxing the activity because gambling is subject to tax in almost every other country in the world.

“I am going to regulate … in March, we will regulate,” Haddad said, referring to his intention to send a regulatory proposal to the President’s office for final approval after consultation with other government ministries.

The finance minister’s comments appear to confirm a series of recent reports that Brazil’s government is finally gearing up to implement a December 2018 federal law that authorised fixed-odds sports betting.

Haddad said taxes applied to online gambling would help to mitigate the impact of a planned increase in the national income tax threshold, raising revenue from operators “who don’t pay a single tax and take a fortune out of the country”.

The Brazilian government’s secretaries of treasury and economic reform have developed their own estimates for how much tax revenue could be produced, although the pair’s projections are not currently aligned, according to Haddad.

“The model is ready but we need an estimate that’s a little more precise,” he said, suggesting tax revenue would likely amount to “not many but several billion” Brazilian reals.

Haddad did not offer specific details of the forthcoming regulations and the accompanying tax regime. The 2018 law, as amended, establishes a combination of turnover- and revenue-based taxes that are understood to add up to around 19 percent of gross revenue, although it is conceivable those rates could be altered again through further legislation.

Reuters initially reported on Wednesday that Brazil’s government was intending to tax both online sports betting and casino games through its upcoming regulation, but Agencia Brasil, UOL and other outlets later said finance ministry officials had since clarified Haddad was referring exclusively to the taxation of sports betting, and not casino, lottery-style or “electronic games” in general.

Various media reports had already indicated that the finance ministry was in the final stages of crafting a regulatory decree and additional legislation to establish a licensing regime for sports betting, with a recent betting corruption scandal involving several teams in the second tier of Brazil’s football league adding extra urgency to the process.

The 2018 law initially set a December 2022 deadline for regulations to be adopted, only for that deadline to fall by the wayside in the wake of last October’s presidential elections that saw Lula dramatically return to power for a third term in office.

Haddad on Wednesday criticised former President Jair Bolsonaro’s inaction on sports betting since 2018, saying Bolsonaro “had four years to do these things and didn’t do anything”.

The belated implementation of a regulatory regime for sports betting is expected to involve a presidential emergency decree, or Medida Provisória, that will make various amendments to the original 2018 law, including by establishing additional penalties for unlicensed operators.

Once published by the President, the emergency legislation will then need to be adopted as a permanent law by both the Chamber of Deputies and Senate in a fast-tracked congressional review process lasting no more than 120 days. Members of both houses will have opportunities to propose and potentially adopt amendments to the emergency measure, which could then be either accepted or rejected by the President.

Haddad’s remarks on Wednesday are a further indication of the Brazilian sports-betting market finally catching alight in 2023 after the slower burn of the past few years.

Last week, the Minas Gerais state lottery become the first in Brazil to launch online sports betting within its borders.

The move by the lottery of Brazil’s third largest state reflects a September 2020 Federal Supreme Court ruling that granted state and municipal governments equal rights as the national government to operate lottery games in their jurisdictions.

As fixed-odds sports betting was technically authorised as a form of lottery by the 2018 law, state- and potentially city-run lotteries also have legal authority to offer sports betting as part of their product portfolios.

The LotoMinas.bet platform also features a range of interactive instant lottery or iLottery games and is being managed by Loto Mineira’s long-term partner Intralot do Brasil, in collaboration with NeoGames, Aspire Global and BtoBet, according to a statement released earlier this week.

Various other Brazilian states remain in the process of procuring technology partners to launch their own expanded lottery offerings, including sports-betting products.

On Tuesday, São Paulo Governor Tarcísio de Freitas included an operating contract for a new state lottery in his government’s formal privatisation programme for 2023.

A bidding process for the lottery contract has already begun and is currently in the stage of technical evaluations to configure the contract, according to a statement released by the governor’s office.

The São Paulo lottery operation will involve fixed-odds sports betting in addition to other lottery games as permitted by federal law, with the state government expecting to raise R$1bn (approximately US$193m) through the contract.

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