The Federal Government has declared its ongoing efforts to regulate fixed-odds sports betting, aiming to establish transparent guidelines and ensure a fresh stream of income for Brazil. Under the proposed regulations, companies will be subject to a 16% tax on the Gross Gaming Revenue (GGR), which encompasses the total revenue generated from all games played, deducting the prizes awarded to players. Additionally, the prize amount received by the player will be subject to a 30% Income Tax, with a BRL 2,112.00 exemption.
The Civil House has received a Provisional Measure (MP) endorsed by the Ministries of Finance, Planning, Management, Health, Tourism, and Sports, aimed at instilling confidence and security among gamblers through transparent rules and robust oversight. Once approved by President Lula, the MP will be officially published by the government and remain valid for an initial period of 60 days, with the possibility of a 60-day extension, effectively becoming law.
The MP outlines measures to reduce the bookmakers’ share of revenue while increasing their obligations to the government. It also proposes the creation of a working group, as stated in a separate decree, to monitor issues within the sector, such as result manipulation.
Among the key provisions, the MP assigns responsibility for supervising the activity in Brazil to the Ministry of Finance. It stipulates that financial transactions between betting companies and bettors must take place exclusively through bank accounts held by institutions authorized by the Central Bank to operate within the country.
The Ministry of Finance is actively pursuing efficient and modern systems aligned with global best practices. The MP further mandates the establishment of a secretariat within the Ministry of Finance to review documents and approve the accreditation of betting companies in the country. This secretariat will also monitor betting volume and revenue to ensure tighter control over the fixed-odds sports betting market.
According to the MP, only qualified companies will be eligible to accept bets on official sporting events organized by federations, leagues, and confederations. Companies lacking qualification will be deemed engaged in illegal practices and prohibited from conducting any form of advertising, including digital media. These qualified companies will be subject to a 16% tax on the Gross Gaming Revenue (GGR), representing the revenue from all games played minus the prizes awarded to players. Additionally, players’ prize winnings will be subject to a 30% Income Tax, with a BRL 2,112.00 exemption.
Furthermore, the revenue generated from fees and taxes will be allocated to crucial areas such as public safety, basic education, sports clubs, and social initiatives. The total collected amount will be distributed to benefit different sectors of society.
Out of the 16% tax, 2.55% will be directed to the National Fund for Public Security to combat match-fixing, money laundering, and other criminal activities associated with betting. An additional 0.82% will be allocated to basic education, 1.63% to sports clubs, 10% to social security, and 1% to the Ministry of Sports.
The ministry has the authority to request technical, economic-financial, and accounting information from companies, as well as data, documents, and certificates related to their operations. Regarding tax rates, the MP introduces amendments to Law 13,756/18, which initially allowed bookmakers to operate in Brazil.
The changes include:
- Reducing the percentage allotted to bookmakers from 95% to 84%.
- Introducing a 1% allocation of the collection to the Ministry of Sport, which was not specified in the previous law.
- Allocating 10% to social security, which was also not part of the original law.
The text maintains the percentage allocated to clubs and sports entities as already stipulated by the existing law, which stands at 1.63%. There were discussions within the CBF (Brazilian Football Confederation) about potentially increasing this percentage to an additional 4% of gross revenue. However, the proposal, initially presented by the confederation but later withdrawn, did not progress.
Fixed-odds bookmakers were granted authorization to operate in Brazil in 2018 when Law 13,756 was sanctioned by former President Michel Temer. Despite nearly five years having passed, the legislation has yet to be fully regulated, meaning that no specific rules have been established for its operation.
|Law of 2018||PM of 2023|
|95% for betting lottery operator||84% for betting lottery operator|
|2.55% for the National Public Security Force (FNSP)||2.55% for the National Public Security Force (FNSP)|
|1.63% for sports entities||1.63% for sports entities|
|0.82% for public schools||0.82% for public schools|
|10% for Social Security||1% for the Ministry of Sports|
Betting prohibited for officials and athletes
The MP introduces changes regarding advertising regulations for companies. It prohibits unlicensed bookmakers from advertising their services. To obtain a license, these companies must pay a fee and adhere to a set of rules that will be defined in a forthcoming ordinance.
Additionally, the Ministry of Finance prohibits certain individuals from placing bets. This includes administrators and employees of bookmakers, individuals under the age of 18, public officials, and individuals associated with sports entities such as directors, coaches, and athletes. The MP identifies these individuals as having the potential to influence the outcome of actual events.
This week, the Justice of Goiás accepted a complaint filed by the Public Ministry against 16 individuals who are under investigation in the Penalidade Máxima II operation. Among the 16 individuals are seven soccer players. The investigation aims to uncover evidence of match-fixing.
Rights purchase prohibited
The measure also includes provisions that restrict betting companies from participating in the market for purchasing television rights, internet streaming, or any other form of broadcasting sports events. They are also prohibited from providing financial support for such acquisitions.
President Lula has also received a draft decree aimed at addressing measures to combat match-fixing. If approved, the group will consist of three representatives from the Ministry of Sports and three from the Ministry of Justice.
The participants in the group include representatives from various organizations, such as the OAB (Brazilian Bar Association), CBF (Brazilian Football Confederation), COB (Brazilian Olympic Committee), CPB (Brazilian Paralympic Committee), Brazilian Institute of Sports Law (IBDD), National Association of Games and Lotteries (ANJL), Brazilian Institute of Responsible Gaming (IBJR), Brazilian Sports Betting Association (ABAESP), Brazilian Association for the Defense of Sports Integrity (ABRADIE), SIGA Latin America, and the International Betting Integrity Association (IBIA).
Currently, there is no provision for the participation of any entity representing athletes. The group is expected to meet every two weeks to discuss the issues at hand.
Once an MP is published by the government (which has not yet occurred for betting regulation), it is valid for a period of 60 days, with the possibility of a 60-day extension. During this period, the text undergoes review by members of the House and Senate, who have the authority to make changes to the wording before enacting it into law.
The MP mandates that betting companies are required to actively promote informative and preventive measures to educate and raise awareness among gamblers, with the goal of preventing pathological gambling disorders. This initiative prioritizes the mental health of individuals involved in gambling activities, aiming to prevent addiction and related issues.
To ensure responsible and ethical marketing practices, guidelines concerning communication, advertising, and marketing will be developed in collaboration with the National Council for Advertising Self-Regulation (Conar). This partnership aims to establish standards for advertising timeframes and formats, particularly in online advertisements, fostering a safe and regulated environment for betting activities.