Brazil’s Chamber of Deputies' Finance Committee held a public hearing on Wednesday (April 12) on the regulation of sports betting and imminent presidential emergency decree, with a senior government official confirming a proposed effective tax rate of 15 percent of gross gaming revenue.
José Francisco Manssur, special advisor to the Executive Secretariat of the Ministry of Finance, said in the hearing that, after much research, Brazil wanted to emulate the United Kingdom’s tax rate, believing that it hit the sweet spot of raising government revenue while remaining competitive for operators.
“We looked for the best practices and found that the ideal taxation model is the United Kingdom, where taxation is 15 percent on the GGR, which guarantees the permanence of 87 percent of the players operating in that market,” said Manssur, referring to the percentage of operators in the UK with a local licence.
The tax on players' net winnings will be 30 percent, a rate that Richard Santos, who represented bettors at the hearing, was unhappy with.
He said bettors are “irritated with the way the regulation has been conducted. All the money in the industry is in our hands, as bettors are the ones who put money in the industry. If you tax them on the winning bet, it will be a shot in the foot and it will go to the offshore market. We want regulation and we are available to talk about it. And the taxation should be on the profit and not on the winning bet.”
Manssur reiterated during the hearing that sports-betting platforms which do not obtain a licence will not be able to continue any existing sponsorships or advertising contracts. “Only operators that are accredited upon payment of a grant, minimum share capital and proof of being established in Brazil will be legal,” he said.
The official also confirmed that licensed operators would be forbidden from offering online casino games on their platforms, with Congress retaining the authority to choose whether to authorize other forms of gambling in future.
"Whoever continues to offer, on their sites, games that are not permitted in Brazil will be practicing an illegal activity," Manssur said.
Meanwhile, a less anticipated but still relevant bill to amend Brazil's General Sports Law was approved by the Chamber Commission for Education, Culture and Sport on Wednesday and goes on to the plenary of the Chamber of Deputies for approval.
The final text rejected all of Deputy Felipe Carreras’ proposed changes, which would have made sports-betting operations in the country difficult at a time when online betting is still in the process of being regulated.
Those proposed changes included having a Brazil-based legal team and a stipulation that sports-betting platforms would need the permission of sports confederations to put markets from the federation's matches on their platform. It would have also given the Brazilian Football Confederation (CBF) the power to audit sports betting on the Brazilian Series A, B and C leagues.
The bill's rapporteur, Senator Leila Barros, rejected all of the above changes.
The General Sports Law bill was first proposed in 2017, and aims to replace various pieces of earlier legislation that pertains to the governance of sport with a single text. Specifically, it would replace the Pelé Law, the Fan Statute, the Sports Incentive Law and the Bolsa-Atleta Law.
The so-called Pelé Law has been a hot topic recently, as the sports-betting provisional measure being prepared by the government will need to address it. Currently, rights to the use of logos and names of sports clubs are protected by the Pelé Law and betting operators will need to use them.
As sports-betting lawyer Udo Seckelmann of the Bichara e Motta firm told ViXIO GamblingCompliance last week: “It's a big discussion right now here if this use by the betting operators would be a violation of this protection.”
Despite the CBF seemingly losing out on the chance to audit sports betting, the country’s football body went to bat on Tuesday in Brasilia against a few of Brazil’s top football teams, seeking a larger share of sports-betting revenue.
A coalition of leading football clubs, including Flamengo, Corinthians, Fluminense and Bahia, protested against the CBF attempts to gain a share of revenue from Brazilian league games, saying that the CBF has claim to national team games only.
The CBF, in turn, is lobbying for a share of as much as 4 percent of turnover, a figure that has raised eyebrows for being too high.
The clubs themselves, according to the text of the sports-betting law signed by former President Michel Temer in 2018, are entitled to 1.63 percent of the gross revenue from the sports-betting market.
The CBF is expected to present its case to the government today (April 13).
Manssur assured the industry present at Wednesday's Chamber of Deputies hearing that the final touches are being put on the provisional measure, which is expected to be published and introduced in Congress in the next two weeks.