Brazil To Proceed On Two Tracks For Sports-Betting Legislation

June 26, 2023
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A forthcoming provisional measure to enact a sports-betting law in Brazil is expected to deal exclusively with taxation and penalties, while an accompanying bill will address other issues, including match-fixing, local legal experts say.

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A forthcoming provisional measure to enact a sports-betting law in Brazil is expected to deal exclusively with taxation and penalties, while an accompanying bill will address other issues, including match-fixing, local legal experts say.

A long-awaited provisional measure, or emergency decree, which would immediately bring into effect the federal sports-betting law passed in 2018, was expected to be published in May before it was abruptly shelved due to behind-the-scenes political machinations.

Chamber of Deputies president Arthur Lira has emerged as an extremely powerful figure and his centrist bloc wanted sports betting to be addressed through a regular bill, which would allow lawmakers more power over regulations as a bill would be vetted and approved in both houses of Congress.

Pushing through a provisional measure despite Lira’s wishes risked greatly weakening President Luiz Inácio Lula da Silva’s bargaining power for the rest of his legislative agenda, according to political commentators.

Still, Brazil's Ministry of Finance, led by Fernando Haddad, is still insisting it will publish the provisional measure.

The ministry argues that it is important to legalise sports betting as soon as possible so the ministry can release secondary decrees mapping out the specifics of how the market will be regulated.

“The information I have is that the taxation and administrative penalties will be part of the provisional measure, because without that the legislation is incomplete and the Minister of Finance cannot start writing the complementary rules,” Brazilian lawyer Rafael Marchetti Marcondes, who is the legal director of fantasy sports operator Rei do Pitaco, told VIXIO GamblingCompliance.

“The bill would have the rest of the subjects that are not tax and penalties. There are a few things concerning requirements for the companies to apply for federal licences, general guidelines about publicity; I do expect something about integrity because we have a CPI,” Marcondes said.

Integrity risks in football have quickly become a buzzword for politicians in Brazil, with a special congressional commission, or CPI, currently conducting a wide-reaching investigation into allegations of spot-fixing scandals that have rocked the sport since first coming to light in February.

Marcondes expects that the bill may include limits on the types of bets permitted, outlawing wagering on outcomes such as corner kicks, yellow cards and other events to prevent match-fixing and bribery. It is inspired by the system that is currently in place in France.

Similar restrictions currently in place in France were cited in the Chamber of Deputies last week by CPI president Júlio Arcoverde: “I think the model adopted in France could be adopted in Brazil, with the creation of a regulatory agency.”

The interplay between match-fixing concerns and regulation will be in focus again in Brazil's Congress when the CPI holds a public hearing on Tuesday (June 27) on the legalisation, taxation and regulation of sports betting.

Witnesses scheduled to testify at that hearing include the president of the Bank of Brazil, the secretary of Brazil's internal revenue service, as well as Jose Francisco Manssur, a special advisor to the Ministry of Finance who has been the chief architect of the upcoming provisional measure.

If France could be an influence in terms of betting integrity, Marcondes does not expect to see a repeat of the French market opening that saw high tax rates leading to many operators choosing not to pursue a licence.

“If we keep it at the current level, I think that's feasible; it's doable here,” Marcondes said of a planned headline rate of 16 percent of betting revenue plus other business taxes. “It's not going to be the UK market, in terms of channelling, but we would have a good channelling rate.”

The provisional measure, according to public comments from officials within the Ministry of Finance, is expected to be published at the end of the month.

Additional reporting by James Kilsby.

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