Brazil’s President rubberstamps regulated sports betting and igaming

Brazil’s President, Luiz Inácio Lula da Silva, has given his approval to usher in regulated sports betting and igaming in the South American country.

Lula approved Law 14,790 on 29 December, with confirmation of his decision published in the official diary of the union on 30 December.

The Brazilian Ministry of Finance will now be responsible for issuing the final regulatory decrees for the sector to be formally regulated.

From there, operators will have 180 days to submit licence applications, with each five-year licence costing BRL30m (£4.8m) and allowing holders to launch three brands in the market.

Lula also retained the 12% GGR tax rate, of which the monies collected will be divided between public spending on education, safety, sports and tourism.

No further changes were made to marketing regulations, while operators wishing to secure a licence in Brazil will still need a Brazilian individual to sit on the board with “20% of the share capital”.

However, the leftist President has made his mark on the regulatory framework after vetoing definitions relating to taxes on player winnings.

In the paperwork that was sent to Lula, a 15% tax rate was included on winnings above BRL2,112 each year.

Within Article 31, it noted that the tax would be “levied on net premiums that exceed the value of the first band of the [individual income tax] annual progressive table”.

However, Lula has vetoed this from the law, along with points on how a “net prize” will be considered and when the taxes are due to be paid by winners.

Despite this, the President has retained that winnings will be taxed at a 15% rate. What remains unclear, for now, is to how this will be calculated.

Reacting to Lula’s approval, the Brazilian Institute for Responsible Gaming (IBJR) – a trade body representing certain international and domestic operators – praised the landmark decision but did sound concerns over tax aspects.

The operator lobby group said: “Brazil has full conditions to become an international reference for the online gaming sector. The emergence of this new industry, which has innovation and technology in its DNA, was only possible thanks to the joint effort of the legislative and executive branches, in collaboration with the private sector.

“The broad dialogue forged a modern text, in line with global best practices, which makes potential national and foreign investors start, in the first days of 2024, their analyses and plans for billionaire investments in the country.

“However, the IBJR is afraid of the lack of definition of the basis and the way of calculating the income tax levied on the premiums paid to the end customer. Since the consumer is the reason for the existence of the entire sector, this definition needs to happen quickly and rationally.

“The Institute is now available for the construction of a sustainable model for this issue together with the responsible bodies. The poor experience on the part of the client, both in relation to excessive taxation and as a result of a complex calculation system, tends to push the consumer into the informal market in the short term.”