Brazil Set To Place Big Bet On Online Casino

September 13, 2023
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The lower house of Brazil’s Congress is poised to vote Wednesday on a heavily amended sports-betting bill that would also now authorise online casino games while maintaining high taxes and fees that have been sharply criticised by operators.
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The lower house of Brazil’s Congress is poised to vote Wednesday (September 13) on a heavily amended sports-betting bill that would also now authorise online casino games while maintaining high taxes and fees that have been sharply criticised by operators.

A heavily amended version of a sports-betting bill initially introduced by Brazil’s government was released late on Tuesday night by Adolfo Viana of Bahia State, the federal deputy who was last month appointed to the key role of rapporteur of the legislation that is designed to finally implement a licensing regime for online betting. 

Chamber of Deputies president Arthur Lira confirmed earlier Tuesday that the lower house of Congress is expected to vote to pass the bill later today, giving lawmakers little time to evaluate significant policy changes that would transform Brazil’s legal gambling market.

The bill, in part, replicates the earlier “provisional measure” emergency decree on sports betting that was published by Brazil’s government in late July but is set to expire in November. 

Among other things, Viana’s version of bill PL 3626/2023 would maintain the headline tax rate of 18 percent of gross gaming revenue, which rises to around 30 percent once additional services and local taxes are added on top. Player winnings also would remain subject to income tax. 

In addition, the bill would cement a R$30m (or approximately US$6m) upfront fee for a five-year licence, an amount that was not actually included in the provisional measure but has been rumoured as the target for Brazilian government officials for several months.

In a major change, however, licensed operators under Viana’s version of the bill would now be able to offer bets on “virtual online gaming events” determined by random number generators, in addition to both online and retail wagers on sports.

Lira, Viana and other deputies have spoken in recent days of the need to include online casino games in the legislation because offshore operators not only already offer them alongside their Brazilian-facing sportsbook platforms, but online gaming also offers far greater tax revenue for beneficiaries such as Brazilian sports, tourism and other governmental agencies.

“We understand that the legislative changes proposed by the Executive Branch are important and positive, but they do not resolve all the questions which, as we understand it, are important and necessary to guarantee the lawful and safe operation of fixed-odds betting in our country,” wrote Viana in his introductory notes on the closely watched bill.

Under the proposed legislation, the Ministry of Finance would be empowered to adopt a series of more detailed rules, requirements and standards governing the licensing process, anti-money laundering and responsible gambling policies, and sports integrity.

But advertising and marketing restrictions would be much tighter under the Chamber of Deputies’ bill than under the regulatory regime initially proposed by the government’s provisional measure.

One article of Viana’s bill would expressly ban licensed operators from offering any form of bonus as an incentive to place a bet. In addition, advertising regulations would have to include specific restrictions on when and where betting ads could be placed, “in order to prevent them being seen by minors.”

Other chapters of the proposed legislation, which could yet be amended in the coming hours by Chamber committees or on the house floor, would establish various legal penalties for both licensed and unlicensed operators. 

The bill also includes new language to specify that fantasy sports games would not be considered to be a form of sports betting subject to licensing under Brazilian federal law. 

Senate Scrutiny Awaits

The Chamber of Deputies is heavily incentivised to vote on the sports-betting bill as soon as possible because of a so-called urgency clause attached to the legislation which means deputies cannot now vote on any other matter until the bill is addressed on the Chamber floor.

It should be noted that the lower house of Congress has already voted in favour of gambling expansion in the recent past, approving a separate bill in early 2022 to regulate online casino games alongside land-based bingo halls and casino-resorts.

Still, it remains to be seen if the proposal to attach online gaming to sports betting draws opposition from advocates for bingo or other forms of gambling, who have been lobbying behind their own legislation for many years but would not receive the same fast-track treatment as online casinos. 

If passed by the Chamber of Deputies, the legislation would move over to the Senate, which would have a window of no more than 45 days to review, revise and vote on the bill.

In the likely event that senators make amendments, Viana, Lira and other deputies would be able to decide whether to accept or reject those changes, before then sending a final version to the desk of President Lula da Silva to sign into law.

Publication of Viana’s formal report on the bill came just a few hours after the Ministry of Finance’s chief advisor on sports betting told a congressional committee that the government was willing to be flexible and consider a lower tax rate than 18 percent, to make the regulated market “more accessible” for operators.

José Francisco Manssur also told the Chamber of Deputies’ committee on sport that the government was consulting with its lawyers over state-level licensing and regulation of sports betting.

Last month, the state of Rio de Janeiro closed a first-of-its-kind licensing window to enable accredited operators to offer online betting, lottery and skill games throughout Brazil via systems located within the state’s borders. 

“That is not something that the government is going to allow, at least not without a reaction,” Manssur said.

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