Brazil’s President, Luiz Inacio Lula da Silva, has now made regulation in Brazil official, ratifying a new regulatory framework for sports betting and igaming.
Bill 3,626/2023 was signed into law by the head of state on 30 December.
President Lula’s approval came after Brazil’s chamber of deputies voted on 21 December to endorse the Bill. Igaming was added back into the bill after previously being removed by the senate.
According to reports in Brazil, President Lula vetoed a proposed income tax exemption for customer earnings of under R$2,112 (PS339/EUR394/$425). Personal net winnings will be taxed at 15%.
Brazil regulation: Taxes
Operators will be taxed at 12% of gross gaming revenue, with the bulk of the total allocated to sports development. Taxation recommendations were submitted by the Economic Affairs Commission on 22 November.
Fixed odds bets will be allowed under the new law, with the country’s Ministry of Finance responsible for regulating operators.
Five-year licences will be awarded, with companies paying R$30m for up to three brands – two fewer than previously expected.
Brazil regulation requirements
Operators must offer customers self-exclusion windows that range from 24 hours to six weeks. They must also have a Brazilian board member who will hold at least 20% of the company’s share capital.
Companies must also verify the identities of bettors – all of whom must be over 18 years old – through facial recognition technology.
The next steps will include the Ministry of Finance publishing regulatory guidelines for operators. In total, more than 130 businesses are reportedly interested in applying for licences.
Inclusion of igaming after initial removal “only natural”
The incorporation of igaming into Bill 3,626/2023 came after it was previously removed by the senate.
Senator Carlos Portinho’s amendment excluding igaming initially passed with 37 votes in favour and 27 against. Despite this, the Chamber of Deputies retained the authority to overturn that decision. It utilised its power to do exactly that.
Neil Montgomery, founder and managing partner of Brazilian law firm Montgomery & Associados, feels the financial benefits of igaming meant its inclusion in the bill was inevitable, stating: “It was only natural that igaming be re-included into the bill.
“To the extent that most of the revenues for operators come from igaming rather than from fixed odds sports betting, and the Federal Government wanted to collect as much tax as possible.”
Hugo Baungartner, vice president for global markets at Brazilian casino operator Aposta Ganha, agrees that the financial allure of including igaming has outweighed the largely Evangelical opposition.
“The government knew that igaming was crucial for their 2024 budget,” Baungartner said. “I could say that was a master play from them.
“They [opponents to igaming’s inclusion] always existed and will exist. However, they have to understand that the gambling business is a reality in Brazil.
“They were, are and will be against gambling forever. Every time that an attempt was made, they did big noise, including an association to work in the contrary.”