The recent regulation of fixed odds betting in Brazil, sanctioned in December 2023, represented an important milestone for the iGaming market in the country. With exponential growth in recent years, driven mainly by the expansion of digital platforms, regulation was inevitable.
We have already shown you the main aspects of the Law, but in this article we explore the main changes brought about, the influence on the financial market and economy, in addition to discussing the impact of the law on the job market.
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Context and growth of the betting market
In recent years, the betting market in Brazil has experienced notable growth. According to recent estimates, around 18.7% of the 18+ population has already bet or gambled in some area, be it sports, online casinos, or other types. This percentage reflects a global trend, where digital entertainment, including betting, is becoming increasingly popular and accessible.
As popularity has increased, so has the need for robust regulation. Before the new legislation, the betting market in Brazil operated in a kind of “gray zone”, without clear rules that protected consumers or regulated the activities of companies. This led to a scenario of legal and fiscal uncertainty.
Main changes
The new fixed odds betting law came to fill this gap, introducing a series of rules that aim to regulate the sector. There are some of them:
- Taxation: The law establishes a taxation of 15% on the net value of prizes obtained by bettors. This taxation aims to increase government revenue, which already estimated a significant loss of revenue due to the lack of previous regulation. Remembering that taxation works on the same principle as income tax, those who obtain winnings smaller than R$ 2,259.20 of the net prize, that is, the difference between the amount bet and the winning amount, are exempt from tax.
- Destination of Revenue: A significant part of the revenue collected from taxation will be allocated to essential areas, such as education (10%), public security (13.60%), sport (36%) and tourism (28%). Furthermore, 50% of the prizes not withdrawn will be allocated to FIES (Student Financing Fund) and 50% to FUNCAP (National Science and Technology Development Fund), it just doesn’t make it clear how long the amount can stay on the platform before be allocated to the funds.
- Operator Regulation: Betting operators, whether national or international, now need to meet strict requirements established by the Ministry of Finance to operate in Brazil. This includes proving financial capacity, maintaining a customer service channel and complying with advertising rules that aim to prevent abusive practices.
Impact on the financial market
Betting regulation has a direct impact on the financial market and the economy. The formalization of this sector attracted significant investments, both from established companies and new entrants to the market. The estimate is that the betting market could generate around R$20 billion annually in the coming years, a substantial amount with the potential to transform entire sectors of the economy.
In addition to the increase in tax revenue, regulation is also creating new job opportunities. With the need for operators to comply with local regulations, companies are expanding their operations in Brazil, creating vacancies in the areas of technology, customer service, marketing, and compliance. The estimate is that the sector could generate tens of thousands of new direct and indirect jobs, especially in regions that, historically, face economic challenges.
Challenges and future perspectives
Although regulation is a positive step, there are still challenges to be faced.
One point of debate is the social impact of betting. The law provides for the allocation of part of the revenues to prevention and treatment programs for gaming addiction, but the effectiveness of these measures will still need to be evaluated over time.
However, the prospects are promising. With regulation, Brazil aligns itself with countries that have already regulated the sector and reaps the benefits of this formalization, such as greater tax revenue, job creation and consumer protection. The success of the law will depend on its rigorous application and the government’s ability to keep up with technological innovations that shape the betting market.
Conclusion
The new fixed odds betting law in Brazil represents a significant transformation for the sector, bringing clarity and security to both companies and consumers. With the potential to generate billions of reais and generate thousands of jobs, regulation of the betting sector is an example of how legislation can be used to transform and boost the economy.
However, for these benefits to be fully realized, a continuous effort of education and innovation in monitoring the sector will be essential. Enforcement of the law will not only increase revenue, but also the economic and social development of the country.
