Brazil’s Chamber of Deputies gave the online gambling industry an early Christmas present in the small hours of Friday morning (December 22) when it granted final approval to a bill to regulate both sports betting and online casino games.
The lower house of Brazil’s National Congress voted just after midnight local time to pass Bill 3626/2023, concluding a months-long legislative process to finally implement an initial law of 2018 and establish a national licensing regime for both retail and online fixed-odds betting.
The final bill represents just about the best-case scenario for operators eyeing a regulated Brazilian market, with deputies accepting several favourable amendments made to the closely-watched legislation in the Senate and rejecting others made by senators that were more problematic.
Most notably, the final version as recommended by the bill’s Chamber rapporteur rejected a Senate amendment to limit the market strictly to wagers on sporting events by deleting references to betting on “virtual online gaming events”, or online casino-style games.
Online casino was included in the bill as initially passed by the Chamber of Deputies in September, but those provisions were removed in the Senate last week amid intense opposition from more conservative senators.
Introducing the bill on the Chamber floor, rapporteur Adolfo Viana, a deputy from Bahia state, insisted that nothing in the legislation would authorise gaming machines or other forms of gambling in physical locations in Brazil.
“We are not here debating whether or not we want online gaming in our country; that’s already the reality and we can’t sweep it under the carpet,” Viana told his fellow lawmakers.
“The bill that we are voting on here today, if we vote against it, gaming will go on existing in Brazil. If we vote in favour, it’s still going to keep existing in Brazil. The big difference is that if this is approved today, all of these sites that offer bets in the country will be subject to a law that we have constructed ourselves.”
Elsewhere, deputies agreed to accept one of several Senate amendments to lower a headline federal tax rate on online betting and gaming from 18 percent to 12 percent of gross revenue.
The final version of the bill also applies a 15 percent tax rate to players’ annual net winnings from online betting, rather than a 30 percent tax on all winnings over a threshold amount of around US$400, as per the initial version approved by the Chamber in September.
Despite the industry-friendly changes made to the bill, Brazil’s legislation still sets high barriers to entry to the Brazilian market, not least in the shape of an upfront licence fee of up to R$30m (approximately US$6.1m).
Still, Senate amendments accepted by deputies do at least mean that the duration of a licence will now be for five years, rather than just three, while operators will be permitted to offer up to three brands or skins under their licences.
Deputies also accepted one of several Senate amendments that will require applicants for an online betting licence to be at least 20 percent-owned by Brazilian investors — a provision that at least some Brazilian lawyers believe could be subject to legal challenge on constitutional grounds.
Language that appears to ban all bonuses or incentives for online betting is also included in the final version of the bill, with deputies unable to address that issue on Thursday night as the same language was included in both the Chamber and Senate versions.
Speaking on a Vixio GamblingCompliance webinar last week, however, legal experts said the bonus restriction could yet be interpreted as banning only wagering with credit or welcome offers for new customers, with the possibility that secondary regulations may still interpret the bill as allowing for retention bonuses for existing players.
Through its final report on the bill, the Chamber of Deputies accepted further Senate amendments requiring operators to use facial-recognition technologies to verify the identity of bettors, prevent diagnosed gambling addicts from betting, and monitor the behaviour of their customers for potential signs of gambling harms.
The lower house also adopted a Senate amendment to restrict the ability of Brazil’s 26 states to either operate or license sports betting or other online lottery games within their own jurisdictions.
Separate Senate amendments expressly authorising Brazil’s Caixa Econômica Federal national lottery to participate in the market were not included in the final version of the bill, although Viana suggested this was done in error and could be corrected.
Also rejected were Senate-backed amendments to subject fantasy-sports providers to the same 12 percent tax on revenue as sports-betting operators, and to require all online bets to be registered with a central entity authorised by the Ministry of Finance to assist in monitoring for potential risk to sports integrity.
After debating the legislation over the course of several hours, deputies ultimately voted by a margin of 292-114 to accept Viana’s final report on the bill before then holding a second vote to send Bill 3626/2023 to President Luiz Inácio Lula da Silva to sign into law.
Two motions brought forward by anti-gambling lawmakers to delay a vote on the bill were defeated, as was another motion specifically seeking to remove online casino games from the legislation.