Brazil Takes Critical Step Toward Full Online Gambling Regulation

September 14, 2023
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Brazil’s Chamber of Deputies has passed a bill to regulate sports betting and online casino games, but only after amending the legislation to limit the duration of licences costing more than $6m to a term of just three years.

Brazil’s Chamber of Deputies has passed a bill to regulate sports betting and online casino games, but only after amending the legislation to limit the duration of licences costing more than $6m to a term of just three years.




The lower house of Brazil’s Congress passed an amended version of PL 3626/2023 on Wednesday night (September 13), around 24 hours after the Chamber first published its version of the legislation to belatedly implement a national licensing regime for fixed-odds betting.




The bill had been amended by its rapporteur earlier in the day to restrict the term of licence authorisations to three years, rather than the five-year term that was initially proposed. The unlimited number of licences to be awarded by the Ministry of Finance will cost R$30m (or around US$6.1m) upfront, meaning operators would face an annual licensing cost of more than US$2m.




Gross revenue from fixed-odds betting would also be subject to a headline gaming tax rate of 18 percent that rises to around 30 percent once other taxes are included. Industry interests have also been unsuccessful, at least so far, in lobbying to exempt online betting from a 30 percent income tax on player winnings over a certain threshold.




In a major positive for online betting operators, the Chamber of Deputies did not stray too far from its 11th-hour plan to expand regulation of sports betting into all forms of online gambling.




Original legislation to regulate fixed-odds betting would have restricted the market to sportsbook operations only, before leaders of the Chamber of Deputies agreed in recent days to also include casino-style games that are already offered alongside sports betting in Brazil’s booming offshore market.




Speaking on the Chamber floor on Wednesday, the bill’s rapporteur and principal author deflected criticisms voiced by more conservative deputies opposed to gambling expansion.




“Today is not about whether or not to liberalise online gaming,” said Adolfo Viana, a federal lawmaker from Bahia State in northeastern Brazil. “It’s about taking responsibility to regulate an activity that is already taking place across the whole country.”




Deputies did agree to tweak the bill to limit online gambling to bets on sporting events, as well as those meeting a statutory definition of “virtual online games”, removing a prior clause that would have also allowed the Ministry of Finance to authorise betting on any other real-life or virtual events it deemed fit.




Under the bill, operators could be licensed to offer sports betting both through online platforms and in retail locations, subject to certain conditions. But other games would be allowed strictly online, seemingly closing any potential legal loophole for casino-style games to be offered in physical venues. 




Following approval in the lower house, the bill will now pass to the Senate where industry advocates may seek a more sympathetic audience when it comes to taxes, fees and certain other provisions. 




The Chamber of Deputies will remain in the box seat, however, as Viana, Speaker Arthur Lira and other deputies will be able to either accept or reject any amendments made by senators before sending a final version of the bill to the desk of President Lula.




Other potentially problematic provisions in the bill as passed by the Chamber on Wednesday include an apparent ban on player bonuses based on a prohibition for operators to offer any kind of “advance … bonus or prior benefit to place a bet, even if as a promotion, publicity or marketing.”




Lottery retailers lobbied successfully for an amendment on Wednesday to exempt themselves from a general ban on operators offering deposit or banking services in any physical sports-betting locations.





 

The licensing regime for online betting and gaming would be reinforced by a variety of new penalties and sanctions for unlicensed operators, with the Ministry of Finance empowered to request the blocking of web addresses and financial transactions, as well as the removal of ads for illegal sites.




The bill approved by the Chamber of Deputies builds upon the Brazilian government’s so-called provisional measure for sports betting that was published in July and technically already has legal effect until it expires in November.




It should be acknowledged that the Chamber has already shown itself to be open to gambling expansion in general, whereas the Senate has been a tougher nut to crack, having recently stalled a broad gaming bill for both online and land-based casino and bingo games that was approved by the lower house last year.




That go-slow approach will not be an option for senators this time, however. 




As PL 3626/2023 is considered an urgency bill, the Senate will have just 45 days to vote on the measure, meaning senators must act before the end of October.




         

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