Sports Betting Legislation in Brazil Gains Traction

Brazil, a country identified for the high potential of its sports betting market, made a major move toward regulated sports betting after the country’s President, Luiz Inacio Lula da Silva, signed a Provisional Measure (PM) that paves the way for the activity. The announcement comes after significant delays but represents a milestone moment as it passes a sports betting regulation that dates back to 2018.

Still, the recently approved measure implements changes to the 2018 sports betting law. Now, the Congress in Brazil will have a deadline of four months to vote and greenlight the Provisional Measure. Five years ago, in 2018, the country passed a law that enabled online sports betting.

However, the establishment of additional regulations for the betting sector were delayed, which ultimately resulted in losses related to tax revenue. This is because betting companies operated in the country but since there was no legislation in effect, they didn’t pay tax revenue.

Now, the freshly signed measure by President Lula da Silva seeks to change this. The proposed regulation calls for the implementation of an 18% tax on gross gaming revenue (GGR). An initial proposal called for the implementation of a 15% tax on GGR, a figure which was later changed to 16%. The latest proposal increases further the tax rate to 18% as it seeks to boost the revenue directed toward the Ministry of Sports from the initial 1% to 3%. Further changes to the regulations include an increase in the license costs for sports betting operators.

Sports Betting to Bring Fresh Tax Revenue

In light of the PM, the next step is now for the Ministry of Finance to develop SNJA, the regulatory body that will be in charge of sports betting. The new regulator is expected to be in charge of licensing, ensuring that operators adhere to the rules and other supervisory responsibilities.

After years of delay, it is unclear how much Brazil missed in tax revenue. However, projections by the country’s Minister of Finance, Fernando Haddad, claim that the government can benefit from BRL2 billion ($423 million) from sports betting next year, a report released by Reuters suggests. Still, according to Haddad, the aforementioned estimate was “conservative” which means that the proceeds may be even higher.

While further changes to the regulation aren’t unexpected, it remains unclear when Brazil will finally implement its robust regulation regarding sports betting. Certainly, the 18% tax on betting GGR may push some operators away from the market but an industry-wide withdrawal is highly unlikely, considering the incredible potential of the market in Brazil.