Definition Of Online Casino Games Adds To Confusion Over Brazil's Betting Bill

September 15, 2023
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After online gaming was added to a sports-betting bill hours before it was approved by Brazil's Chamber of Deputies, confusion remains around which types of online casino games will be allowed.
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After online gaming was added to a sports-betting bill hours before it was approved by Brazil's Chamber of Deputies, confusion remains around which types of online casino games will be allowed.

One international operator with its eyes on the Brazilian market told Vixio GamblingCompliance that although the company was encouraged by the prospect of being able to offer casino games alongside sports betting, it wanted clarification about what exactly would be permitted under the bill that will now be considered by Brazil's Senate.

According to the amended text that was approved late Wednesday night (September 13), licensed operators will be able to offer bets on sporting events as well as “virtual online gaming events” in which “the result is determined by the outcome of a random future event, based on a random generator of numbers, symbols, figures or objects”.

On its face, this definition would appear to eliminate the prospect of live dealer games, which are technically determined by the actions of the dealers themselves rather than a random generator.

Rafael Marchetti Marcondes, the legal director of leading Brazilian fantasy sports operator Rei do Pitaco, said that clarification regarding the scope of online gaming may come via an executive decree to be enacted following final approval of the bill.

Luiz Felipe Maia, gambling lawyer and partner at Maia Yoshiyasu in São Paulo, said that live casino games could still be permissible but it “depends on the interpretation”.

Maia was more concerned with the implications of a separate provision of the bill prohibiting the awarding of bonuses as an incentive to place a bet.

“This is one of the things that needs to be changed. Because it's a big misconception. Instead of understanding the bonuses as a marketing strategy, they are prohibiting bonuses in an understanding that it is against responsible gaming policy.

“The problem is the offshore providers will continue offering [incentives]. So what they're doing is making the illegal operators even more attractive,” Maia told Vixio.

Representatives of operators who wished to remain anonymous stated their continued displeasure with the effective tax rate of 30 percent, or more, of gross gaming revenue. 

Although an upfront licensing fee of R$30m, or around US$6m, is already high, a reduction in the licence term from five to three years makes the market even more expensive to enter.

Conversely, industry executives were encouraged to see that Brazil's forthcoming Secretariat of Betting would remain with the Ministry of Finance, even though Chamber speaker Arthur lira made a hard push to move the regulator to the administration of the Ministry of Sport, which is run by his close colleague André Fufuca. 

The Ministry of Finance has gained a lot of institutional knowledge on the industry and moving regulatory oversight to the Ministry of Sport could seriously harm the market and undo “all the good work” done so far, one official said.

Marchetti Marcondes of Rei do Pitaco also saw silver linings despite the tax rates, particularly for fantasy sports.

The bill expressly excludes fantasy sports based on skill from the legal definition of fixed-odds betting, providing legal protection for such contests and ensuring they will not need to be licensed and taxed in the same manner.

Definitions in the bill mirror those of the United States' Unlawful Internet Gambling Enforcement Act of 2006, a federal law that ultimately spawned the rise of FanDuel and DraftKings.

“The Brazilian government, if it approves this text in such a way, will follow the same steps of the most consolidated fantasy market in the world,” Marchetti Marcondes said.

The sports-betting and online gaming bill now has 45 days to be deliberated in the Senate, where it is expected that Senators Davi Alcombre and Angelo Coronel will have heavy input into potential amendments.

Both senators have historically been allies of legalising sports betting and other forms of gambling.

Alcombre, however, is frustrated that online casino games have been included in the bill when separate gambling expansion legislation is already pending before a Senate committee that he chairs, according to a report in industry news service BNL Data.

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