The Brazilian fixed odds sports betting market enters a new stage after the presidential approval of Law 14.183/2021 last week. The new measure modifies the taxation and distribution of betting revenue in physical and online channels.
According to the Secretariat of Evaluation, Planning, Energy and Lottery of the Ministry of Economy (Secap/ME), this new legislation will allow the Brazilian adaptation to the best international standards and will result in an increase in the collection for the public coffers by boosting a very promising market for the Brazil.
The change in the Federal Congress is in line with what SECAP was dealing with the market, international regulators and potential investors, since the 2018 rule released the segment in the country, but taxation was below the best world standards.
“Law 14.183/2021 will allow the regulation of the market and the fight against the illegal market, which does not pay taxes, in addition to the increase in revenue and the country’s alignment with best practices worldwide. Major international players have already sought out Secap interested in establishing themselves in the country”, highlighted the head of the Secretariat, Gustavo Guimarães.
“With this change in the legal basis, Brazil could be one of the great world markets for this type of betting,” said the Undersecretary of Prizes and Raffles at Secap, Waldir Eustáquio Júnior.
The Secretariat’s forecast is that this regulatory process for sports betting will take place until next year, the year of the Soccer World Cup, with the beginning of the necessary bidding procedures.
Fixed odds betting, a modality popularly known as sports betting, is a lottery in which the player tries to guess the results in real sports tournaments, such as the score, number of cards, scorers and minutes of goals, player changes, in matches of football and other sports.
In addition, the bettor already knows, when he bets, how much he can earn in the event of a hit, by applying a multiplier – the fixed odds – of the bet amount. Law 13.756, of December 12, 2018, established this category as an exclusive public service of the Union and with commercial exploitation throughout Brazil.
This lottery activity is being explored in the national territory online by foreign bookmakers, estimated to move approximately 2 billion reais annually. This amount is remitted outside Brazil.
The new law now considers the gross revenue of the operation (GGR, acronym for Gross Gaming Revenue), that is, the gross proceeds minus the reward destined to the players, instead of the percentage decomposition of the gross proceeds (turnover).
This modification, based on the new law, aligns the country with the way in which the collection of fixed-rate bets is distributed worldwide, stimulating the emergence of a larger and more competitive segment, helping the ongoing privatization process, within the scope of the National Program for Privatization (PND).
The total amount obtained will be initially transferred to the payment of the prizes, the incident income tax (30% for prizes above the exemption limit) and the social security portion (0.10% for physical bets and 0.05% for those in virtual environment).
Once this is done, the remainder will be sent to public schools for Kindergarten, Elementary Education and Teaching that have achieved the goals defined for the results of national assessments, Basic Education (0.82%); the National Public Security Fund (FNSP) (2.55%); to clubs that cede the rights to use their names, brands, badges, anthems and symbols for the dissemination and execution of the lottery (1.63%), and to lottery operators (95%, at most), to cover the expenses of costing and maintenance.