The Brazilian state of Rio de Janeiro has published a formal notice setting out a licensing and accreditation process for retail and online sports-betting operations, with lower taxes and fees set to apply at state level than would apply under a forthcoming federal framework.
Populous Rio de Janeiro, home to some 16m people, published a notice in its Official Gazette outlining the process by which the state lottery will accredit multiple companies to operate fixed-odds sports betting within the state in a competitive market.
Approvals will be for a period of up to five years. The licensing fee will be R$5m (approximately US$1m), with a five percent monthly tax applied on gross gambling revenue (GGR).
Qualification criteria and technical requirements are outlined in a series of annexes and a formal terms of reference, which have been published alongside a 30-page licensing decree.
After a Supreme Court ruling in 2020, all Brazil’s 26 federal states are allowed to run their own lotteries, with fixed-odds sports betting being a possibility since sports betting is recognised as a lawful lottery game modality in Brazil, under a 2018 law.
Rio’s state-level licensing move comes as Brazil’s federal government enters the final stages of its plans to introduce a national licensing system via a forthcoming presidential decree, which is expected to be published as soon as next week.
The upfront fee for a federal licence is expected to be set at R$30m, or six times the cost of an authorisation in Rio, with an anticipated national betting tax rate of 15 or 16 percent, plus additional taxes on top. The population of Brazil is more than 13 times that of the state of Rio de Janeiro, at 214 million people.
Luiz Felipe Maia, a gambling lawyer and founding partner at Maia Yoshiyasu in São Paulo, told VIXIO GamblingCompliance that Rio de Janeiro “may provide a good alternative to the federal licence” for smaller companies and betting companies going for a regional strategy. He pointed out that Rio de Janeiro as a state has a high GDP, comparable with many European countries.
The state lottery of Minas Gerais recently became the first in Brazil to launch an online sportsbook platform, although it is doing so on an exclusive basis rather than a series of licensed private operators, as is the case in Rio de Janeiro. At least one other state – Paraíba in northeastern Brazil – has indicated that it will pursue a similar strategy to Rio.
Meanwhile, the Rio de Janeiro City Council also met this week to begin discussions on a bill that would lower the city’s municipal services taxes (ISS) for sports-betting companies from 5 percent to 2 percent, in order to attract betting operators to have their headquarters in the city. The city of São Paulo, arguably the other natural choice for betting companies, has already lowered the ISS tax to 2 percent, in a similar effort to attract betting or fantasy sports operators.
Additional reporting by James Kilsby.