Operators warn Brazil’s government over proposed sports betting regulations
Newly formed trade body IBJR voices concerns over delays and the “uncertain trajectory of the Brazilian sports betting market”
The Brazilian Institute of Responsible Gaming (IBJR) has written to the Brazilian government to warn that proposed sports betting regulations carry “unnecessary market risks”.
Formed in March, The IBJR, which boasts nine members including bet365, Entain and Flutter Entertainment, has penned a letter highlighting its concerns related to legislative proposals.
The coalition highlighted a “high licence prices, a strict tax regime and restrictive market conditions”, which could “deter international business from investing in Brazil’s new sports betting market”.
Brazil seems set to impose a 16% gross gaming revenue (GGR) tax rate on licensed operators, yet some think the true figure could be closer to 30% once further contributions are taking into account.
What’s more, there could be a winnings tax of 30% applied to customers above a threshold of BRL2,112 (£340), sparking concerns that higher-spending sports bettors will turn to unlicensed operators.
Independent analysis has suggested that 10% of bettors who would likely pay this winnings tax would probably account for 70% of total sports betting revenue.
South America’s most populous country passed a sports betting law in 2018, yet it is still to roll out a regulatory framework some five years on.
Meaningful progress has been made lately on an emergency decree but now it seems there could be a pivot to a regular bill, which would slow the whole process down.
“The IBJR is deeply concerned about the new delays and the uncertain trajectory of the Brazilian sports betting market,” the IBJR added.
As well as the “rigorous” tax regime, which was described as one of the highest in the world, the IBJR was critical of the high licence fees of BRL30m (£4.9m).
The body is concerned that these factors will result in less appealing offers for players when compared to black-market offerings, potentially resulting in lower government income and increased threats to sports integrity and minimal player protection.
“High taxes will result in less appealing value propositions for players than those offered by the parallel market,” the IBJR explained. It also questioned the government’s ability to eliminate unfair competition, criticising the government’s “ambitious” and “unknown” ideas.
It added: “As the regulatory process enters its final stages, we are still not convinced that decision makers understand that legitimate investors will not seek licences in Brazil without the guarantees of sustainable and fair regulation, which allows for fair competition among operators.”
To promote the development of a “fair and sustainable marketplace,” the IBJR proposes expanding product offerings.
In other words, the trade body wants to see online casino included in legislation to level the playing field with Brazil-facing offshore operators.
The trade body warned that the government’s plan to make a temporary measure into law would “create further delays and results in uncertainty for the IBJR and sports betting operators”.