Yesterday (21st December), Brazil’s Chamber of Deputies approved Bill 3,626/2023 which regulates sports betting. The bill has been amended to include igaming after it was removed by the Senate.
The Brazilian Chamber of Deputies voted today to accept online gambling. This gives the green light to the regulation of the market in 2024.
The vote of yesterday evening, 21 December followed the approval by the Senate plenary on 12 December on last Tuesday.
After the bill has been passed by the Chamber of Deputies it will now be sent to the Luiz inacio Lula Da Silva office for approval.
Brazil’s Gambling Regulation: The Final Process
The bill that regulates Brazil’s internet gambling was approved in September by the Chamber of Deputies. However, to accept the amendments made by the Senate last week to the bill, it was necessary to vote again.
The bill was presented to the senate by Senator Angelo Coronel on 12th December. The bill contained the most recent round of changes following the initial approval by the Economic Affairs’ Commission of Brazil three weeks earlier.
Three key points were voted upon by the Senate, despite significant opposition.
The senate voted not only to ban igaming but also to prohibit virtual games, and betting terminals. A proposal to ban sports betting advertisements in stadiums was also rejected.
The Economic Affairs Commission approved all taxation suggestions made on November 22.
The GGR will now be limited at 12% instead of the previous 18%. Taxation of winnings was also modified.
The tax rate will only be 15%, and it is applied once per year. The amount is higher than the BRL2,112 exemption threshold (PS339/EUR394/$425).
A licensee will be expected to pay a fee up to BRL30m. This will allow them to run up to 5 different brands.
What was the impact of igaming on Brazil’s gambling regulations?
The senate removed igaming yesterday from the bill, but the chamber of representatives retained the right to reverse the decision.
Neil Montgomery, the founder and managing director of Brazilian law firm Montgomery & Associados told iGB in an earlier interview that he expected the senate to oppose igaming.
It was particularly the case with the Evangelical Parliamentary Front. During the vote yesterday, Eli Borges, a Deputy and leader of the Evangelicals highlighted that, “we’re taking a step further to include Brazilian citizens in… an unprecedented situation”.
The Debate
Arthur Lira (President of the Chamber) countered Borges criticisms by noting that the proposal had been approved in September by both the deputies and the Senate, which compromised many of its aspects.
Lira emphasized that delaying the vote will not stop online gaming, but instead encourage lack of control.
If we don’t approve the rules, do games stop existing? If we don’t vote on the regulations, will games cease to exist? “No,” replied Lira.
He said that there are already gaming platforms and they need to be regulated. He said: “Here, we’re not trying to increase or decrease, but we’re trying to regulate [the sector] and give it seriousness to avoid money laundering, for instance.”
The text has been changed to remove all references to casinos or physical gambling at the request of Evangelical Parliamentary Front.
The projected revenue from taxation would be lower than expected if online gambling was excluded.
Budgets and Taxation
If the initial goal was BRL1.6bn then igaming losses could reach less than half that amount. It was originally estimated to be BRL 700m. This total falls far short of what the government had hoped to achieve through taxes and license fees.
Neil Montgomery viewed approval in many ways as inevitable. The federal government wants the approval “to help achieve zero fiscal surplus next year”. Montgomery’s comment is in reference to Brazil’s goal to achieve a deficit-free year by 2024.
If the bill that is currently being considered by the President passes, then 36% will go towards sports and tourism. The public safety initiative will receive 14% of the tax, and education and social insurance will each get 10%.
It is expected that the value of inspection charges will also be altered. The value of inspection fees will also be changed. It will instead be calculated based on GGR levels that are lower.
Brazilian operators who wish to start a business must first receive the approval of the Ministry of Finance.
Operators must be partnered with a Brazilian company that owns a minimum 20% of their capital. The operators must also have cybersecurity systems that are up to date.
It also states that operators must implement processes for identification. The bill specifies that facial recognition is a possible method.
Brazil will no longer allow unlicensed operators to advertise. B2B companies will also be forbidden from providing technology for unlicensed B2C businesses. Bonuses are also banned.
What is the gambling regulation?
Brazil’s story of legalised casino and sports betting has been a complex one, as we have covered in depth on iGB.
In May, the Brazilian government released PM 1.182, which allows sports betting.
Da Silva swore to secrecy before the Prime Minister. In July, the president signed it as law.
The PM’s initial reception was poor. Main points of disagreement were the 18% rate on taxes, restrictions in advertising and unclear regulations around payments.
Bill 3,626/2023, which amends PM 1,182, was then introduced.
Online casino was added as the biggest update. The chamber of deputies approved this in September with a tax rate still set at 18%.
