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The Future of Gaming in Brazil


Brazil has the fifth largest population, and the ninth largest economy in the world, the country could easily be a significant market for sports betting. With a population approaching almost 220 million, Brazil’s online sports betting market could be worth over $1.15bn, as Senator Flexa Ribeiro pointed out. Although Brazilian online sports betting has been largely unregulated until now, online sportsbooks were legal. Attempts to ban online gambling prove how prevalent it is. The government in Brazil tried to ban online gambling payments way back in 2006, 2008, and most recently in 2010. Thus far, all attempts have failed. Furthermore, the Senate attempted to ban online sportsbooks in 2011. That measure also failed to gain sufficient support. The Brazilian Senate passed a bill in 2015 that proposed to regulate and tax online sportsbooks, and additionally creating two new lotteries. 


Legal Grey Area


Former Brazilian President Dilma Rousseff vetoed the bill in 2015, and so far, online sports betting operates in a legal grey area. Although Brazilians love betting on sports events, there are not that many legitimate online sportsbooks in Brazil. Until now, Brazilian gamblers have accessed international online bookmakers that accept real money players from Brazil. 


Regulations for online sports betting in Brazil 


Online sportsbooks that cater to Brazilian bettors need to include South American and European football betting options. A legitimate Brazilian sportsbook provides betting on Jiu-Jitsu in mixed martial arts. Several Brazilian fighters participate in the MMA; therefore, sportsbooks will need to offer bet options on the UFC, as well as, the other significant MMA associations. Other popular sports in Brazil include South American and NBA basketball, along with horseracing. Sportsbooks will need to have all online sports bets in the Portuguese language. Sites should also support online transactions in Brazilian Reais. 

 

New sports betting legislation 


The Brazilian Congress finally approved the Provisional Measure (MP) 846. It was subsequently signed into Law 13,756/2018 in December 2018 by the President. The law authorises online sports betting and land-based betting, however, legislation is yet to receive specific enforcement regulations enabling licenses to be granted to private betting operators. The Brazilian Ministry of Finance will be the new regulator for legal sports betting on the country. It is estimated that another two years are needed to finalise all the specific regulations.


Since the Law 13,756/2018 was approved and sanctioned, the Brazilian sports betting market experienced a massive shift. There has been significant growth in advertising revenue for local soccer clubs. Increases have been noted in the number of soccer tournaments and leagues, sports ambassadors, and sponsorships. New land-based and online operations have sprung up as the projected increase in the betting volume takes effect. The new legislation sets out fixed quota betting for retail and online operators. Online operators will be obliged to pay back at least 89% of bets handled back to the customer.


Additionally, operators will have to pay a tax rate of 8% on their turnover. Out of these 8%, 3% is to be channelled into education, social security, along with law enforcement. Unexpectedly, approval of the bill was passed relatively quickly for the country, notorious for its cumbersome political system. The new political climate seems to be much friendlier towards gambling. The Senate Bill PLS 186/2014, passed this year, legalising online sports betting, online casino games and bingo was defeated by 13-2 in a senate vote.


Final Public Consultation 


Potential sports betting operators in Brazil are being invited to a final public consultation. It is a chance to influence and shape the new gambling rules before they are carved in stone. The Ministry of the Economy in Brazil announced the consultation regarding proposed plans, and the regulation of online and offline sports betting. Interested parties had up until the end of September to submit their proposals and counter-reactions to the new draft decree. The document was initially launched in July, and attracted 1,850 submissions, with a third of them from industry types. The draft decree was the result of the ministry’s interpretation of submissions. However, there were apparently still several areas of uncertainty. 


Summary 


Moreover, the decree confirms both online and land operators will have to pay 1% tax on betting turnover. According to government estimates, that will work out at about 6% of the gross revenue from gambling. The draft decree does not contain any other information regarding fees or taxes; however, the government previously confirmed licensees have to pay an upfront fee of US$735, and monthly fees of BRL30k for online operators, BRL20k for land-based, and BRL45k for both at once. Applicants for betting licenses need to provide proof of financial reserves of $1.5m to ensure bettors are paid if the bookmaker encounters financial difficulties. All advertising for betting has to be accompanied by a responsible gambling messaging, and the online operators’ home pages need to be visible. Operators will not be permitted to make fun of the cultural beliefs or traditions in Brazil, or mock people who disapprove of gambling. Operators who are flouting the rules may face penalties amounting to 100% of their gross revenue. Repeat offenders are charged double the original penalty. Betting legislation was signed into law last year, allowing two years for the government to make the final betting regulations. The plan is to prepare and finalise the rules by December 2019, ahead of a betting market launch in June 2020. Operators are already salivating at the prospect of offering sports betting to Brazil’s 212m residents.


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