The CEO of the Brazilian Institute of Responsible Gaming Andre Gelfi has blasted the Lula Administration for imposing one of the “highest tax burdens in the world” on sports betting operators after the President finally signed off on the provisional measure to introduce regulation.
Gelfi noted that the 18% tax rate on GGR is 260% higher than the current taxation laws, making Brazil one of the most heavily taxed jurisdictions in the world.
The CEO said: “This burden concerns companies in the segment and should be viewed with skepticism by Brazilian society, as the entire economic chain derived from this sports betting sector must be impacted.
“Another consequence will be the growth of the parallel market, both physical and online, since companies that operate legally will be able to pass on costs to gamblers and they, in turn, tend to look for more attractive alternatives.”
President Lula signed Provisional Measure No-1182 earlier this week, meaning a fully regulated market could launch within months. Starting this week, Congress will be granted 120 days to analyze the projects and pending reforms put forward by the provisional measure.
The government will aim to govern the sports betting market via a ‘Special Secretariat’ assigned to supervise licensed operators, market size, and authorized bets.
Despite challenges, Brazil’s Ministry of Finance maintains the modality to apply a tax framework of 18% tax on gross gaming revenue (GGR) applied to licensed operators. Further charges will see consumers face a 30% income tax on winning exceeding BRL2,112 per year.
Elsewhere in the legislative update, a bill adopting ‘administrative processes and penalties’ signed by Lula was added to the provisional measure.
Consequently, operators must promote responsible gambling to the public and players and must further ensure the data protection of customers, and work with police authorities against match-fixing.
The market’s rules related to advertising and marketing will be drafted independently by The National Council for Advertising Self-Regulation (CONAR).
The IBJR welcomed the responsible gaming and advertising parts of the measure, noting that it “guarantees of protection for players and also for the sport”.
A statement from the body added: “The text brings positive points in relation to the guarantees of protection for players and also for the sport. One of them is the ban on participation, directly or indirectly, by people under 18 years of age in betting or even people enrolled in the national credit protection registers – SPC and Serasa – in order to protect the most vulnerable people from financial losses.
“We also value the MP’s efforts to create guidelines for advertising in the sector, designating the National Advertising Self-Regulation Council (Conar) to supervise and regulate communication and marketing actions, in addition to carrying out a broad awareness campaign, so that sports betting be another entertainment opportunity for Brazilians.”
IBJR stated that it would be available for any discussions with the legislature or regulators in the build-up to the market launching, which could take place over the next few months, or potentially into 2024.
Provisional measure No-1182 may face a final intervention from Arthur Lira, the President of Brazil’s Chamber of Deputies, the lower chamber in Brazilian politics.