Brazil: Chamber of Deputies Gives Final Approval to Regulate Gambling – Including iGaming

BRAZIL (December 22, 2023) –The Brazilian Chamber of Deputies voted last week in favor of bill 3,626/2023, which regulates sports betting. The large news portal covering Latin America ‘agência latinapress‘ reported iGaming was also reinstated into the law after it was struck down by the Senate. The approval of online gambling has finally received the green light to regulate the market in 2024. Last week’s vote followed the adoption of Bill 3,626/2023 by the Senate plenary last week. After the House of Representatives approves the bill, it will be sent to the office of President Luiz Inacio Lula da Silva for final approval.

Brazil’s gambling regulation: the final trial

According to  ‘agência latinapress‘  the bill regulating Brazilian online gambling was already approved by the Chamber of Deputies in September, but the chamber had to vote again to approve the changes the Senate made to the bill last week. Senator Angelo Coronel introduced the bill in the Senate on December 12th. It included the latest round of changes after Brazil’s Economic Commission approved the bill three weeks ago. The bill faced significant opposition in the Senate, and three key points were voted on. In addition to excluding igaming, the Senate also voted to exclude virtual games and sports betting terminals. An amendment that would ban the advertising of sports betting in stadiums was also rejected. All tax recommendations made by the Economic Commission on November 22nd were also adopted.

This confirms that gross gaming revenue should be limited to 12% instead of 18%. The taxation of profits was also changed. Bettors will only be taxed once a year at a rate of 15% on net winnings. This exceeds the exemption limit of 2,112 reais (US$425). Licensees must also pay an initial fee of up to 30 million reais. In return, they receive the right to operate up to five different brands.

How has igaming returned to Brazilian gambling regulation?

While the Senate voted to remove igaming from the bill, the Chamber of Deputies retained the power to overturn the exclusion. In an interview earlier this month, Neil Montgomery, founder and managing partner of Brazilian law firm Montgomery & Associados, anticipated Senate opposition to igaming. This was particularly true for the Evangelical Parliamentary Front. During yesterday’s vote, MP Eli Borges, a leader in the evangelical movement, stressed that “we are taking another step forward to include Brazilian citizens in an unprecedented situation.”

The debate

The President of the Chamber of Deputies, Arther Lira, responded to Borges’ criticism by saying that the proposal had already been approved in September by the deputies and the Senate, where many aspects of the law had already been agreed. Lira emphasized that postponing the vote would not prevent online gaming, but would encourage a lack of control and money laundering. “If we just don’t vote on the regulations, will there be no more games? Will people stop gambling, betting and sponsoring teams, events and tournaments? No,” Lira said. He emphasized that there are already gaming platforms that need to be regulated. “This is not about more or less, but about regulation and seriousness [of the sector], for example to prevent money laundering,” he said. At the request of the Evangelical Parliamentary Front, any mention of physical gambling or casinos was deleted from the text. However, by excluding online gambling, it was predicted that projected tax revenue would fall short of original expectations.

Budgets and taxation

With an initial target of 1.6 billion reais, losses from igaming would reach less than half that amount. This was estimated at 700 million reais. This sum is in stark contrast to what was originally hoped to be raised through taxes and royalties. In many ways, Neil Montgomery saw approval as almost inevitable. Because “the federal government is pushing for approval in order to contribute to achieving zero deficit next year.” Montgomery is referring to the Brazilian government’s goal of achieving a zero deficit by 2024. If the president approves the current bill as expected, 36% of the tax will go to sports and 28% to tourism. 14% is earmarked for public safety initiatives, and 10% each will go to education and social security. The value of inspection fees should also be changed. It is no longer calculated based on the amount of the premium paid. Rather, it is calculated on the basis of the lower gross value added. Prospective operators must also obtain approval from the Ministry of Finance to operate in Brazil.

The bill also requires operators to introduce identification procedures. Facial recognition technology is mentioned as a possible method. Unlicensed providers are not allowed to advertise in Brazil. Additionally, B2B partners will be prohibited from providing technology to unlicensed B2C companies. Bonuses are also banned.

SOURCE: agência latinapress.