Brazil’s president rubberstamps sports betting regulations in landmark moment

Brazilian president Luiz Inácio Lula da Silva has given his approval for the regulation of fixed-odds sports betting in a landmark moment for the South American nation.

Lula officially adopted the Provisional Measure 1,182 which relates to Law No. 12,756/2018 yesterday (24 July) as confirmed in the government’s Diário Oficial da União.

Following Lula’s approval, Brazil’s Congress will have 120 days to analyse and finalise the bill before eventually ushering it into law.

The left-wing leader’s approval of the legislation comes seven months after former president Jair Bolsonaro failed to approve the regulations before he left office following his election defeat in December.

Looking at the details of the approved Provisional Measure, sports betting will be regulated by the Ministry of Finance, with no limit to the number of licences that could be awarded to operators.

Operators will need to have an established presence in the country to acquire a licence, with the Ministry of Finance able to request technical, operational, financial and accounting information as part of its inspections.

Failure to provide these details when requested could result in a daily fine of BRL10,000 (£1,646.51), which can be increased up to 20 times if required.

Licences are expected to cost BRL30m and will be valid for five years, although Congress will confirm those details in its discussions.

Similarly, Congress is due to confirm the tax rate, which has been now been upped from 16% of gross gambling revenue (GGR) to 18%.

Of the 18%, 10% to be used for social security, 1.63% for sports clubs and 0.82% for education. The Provisional Measure includes an increase in tax that will go to the Ministry of Sports, from 1% to 3%.

The remaining 2.55% will go to the National Fund for Public Security which will work with stakeholders to combat match-fixing and money laundering.

The Provisional Measure did not included details regarding a possible winnings tax, similar to the lottery, with it previously suggested sports betting winnings above BRL2,112 be taxed at 30%.

Concerns have been raised this could lead to higher-spending customers switching to black-market operators or sticking with bookmakers who don’t apply for a licence.

Elsewhere, the Provisional Measure confirmed there will be no major marketing restrictions, with operator encouraged to self-regulate.

Firms will promote safer gambling measures and will work to establish a code of practice in line with existing regulations. Unlicensed operators will be barred for advertising in Brazil.

However, the National Council for Advertising Self-Regulation, CONAR, may establish additional restrictions and guidelines in the future.

Additionally, operators must quickly report potential match-fixing cases, while individuals connected to professional sports organisations will not be allowed to work with or for operators.

The Provisional Measure also outlined the potential regulatory punishment framework, which could be applied to operators that breach the regulations.

Breaches can range from failure to provide documents when requested, advertising as an unlicensed firm and undermining sporting integrity.

Fines have been provisionally set at between 0.1% and 20% of GGR relating to the respective operator’s previous financial year. Fines will be capped at BRL20bn.

The Brazilian market, which legalised sports betting back in 2018, has long been touted as the next industry hotspot, with a football-obsessed population of more than 214 million people.

In March, leading operators including Flutter Entertainment, Entain and bet365 established a lobby group in the country.