The Minister of Finance of Brazil Fernando Haddad has shared that the Presidency is interested in moving forward with the regulation of “electronic gaming”, including sports betting. However, new details of the bill show that online casinos would not be included in the rules.
The local outlet Panorama Deportivo cited Ministry sources and explained what Brazil sports betting regulation includes.
Following Haddad’s comments, the proposal’s author, Deputy Felipe Carreras, received the green light from the President of the Chamber of Deputies Arthur Lira to start collecting the 171 signatures needed for an investigative commission (CPI) to analyze the bill.
Haddad had recently highlighted the need to tax gambling, as this would help avoid “illegality” and would position Brazil on par with other global forces that have already taxed the sector.
“Online gambling is subject to taxes all over the world, it can’t be different in Brazil. There’s an absurd evasion in the country, a lot of money [leaves the country]. There’s no control because they’re not land-based casinos, they’re online casinos. [The discussion] is about the taxation of online casinos, which exist and need to be regulated,” Haddad said to UOL.
Ultimately, the goal is to offset an increase in income tax exemptions in Brazil. The country would balance the state income that will be lost due to the increase in the minimum of tax – which went from $365 to $507 – “with the taxes that electronic games currently don’t pay”.
However, according to sources from the Ministry of Finance, the final text of the measure only includes betting on sports results, while other types of games will eventually be discussed by Congress.
Although online casinos won’t be part of this regulation, the Government will share ordinances that will explain, for example, how companies will be regulated and what the next steps will be so they can regularize their operations.
Another important point of the regulation is that it brings the topic of match-fixing and manipulation to the forefront of the discussions. In fact, the conversation about sports betting regulation started just a few weeks after Lula was sworn in because of a match-fixing scandal in the country’s lower soccer divisions.
Globo reported that the text of the ordinances is being drafted in conjunction with the Ministry of Finance, the Ministry of Sports, the Executive Secretariats, the Secretary of Economic Reform and the National Treasury.
“The manipulation of results in Brazilian soccer matches is increasingly evident. There are speculations and insinuations that external forces are acting to interfere in the matches. We are seeing dissatisfaction everywhere. In Europe, there are cases that were proven after investigations. Brazil is not immune, it’s part of a dark circle. Let’s act,” Carreras urged.
The issues with the taxing system
Although Haddad had elaborated on the need to tax electronic games, the measure only covers online betting, leaving behind casinos or even “video games”, something that had been mentioned by the Minister.
The Government believes that online gambling should generate between $385m and $1.1bn in taxes annually.
Nevertheless, Haddad said that one of the reasons why the project is moving slowly is because it’s difficult to point out the exact amount that would be collected from betting.
“We’re not missing a provisional measure, but the legal obligation to evaluate how much would be collected,” he explained.
“As it’s something totally new, we’re gathering the available information to be able to include the collection forecast in the law or in the provisional measure.”
In addition, he said that the absence of regulations, and the fact that online casinos are not based in Brazil, are “unfair” to the local population since the profits don’t stay in the country.