Approval of the Legal Framework for Gambling would be beneficial for the country and society
Photo: Leonardo Sá/Agência Senado

Drafted in 1991, Bill 442/91 — which establishes the Legal Framework for Gambling in Brazil — was approved in the Chamber of Deputies in February, but is awaiting approval by the Senate. Recently, the proposal gained notoriety again as a possibility to increase the collection for the public coffers.

“PL 442/91 is the result of a long reflection by the Chamber on the legislation of approximately 20 countries. This legislation brings together advances and successful experiences in the legislation of other countries that have a much longer tradition in the exploitation of gambling than ours, as is the case of the United States, Portugal, France and Italy”, clarified the lawyer Fabiano Jantalia.

According to the lawyer, it is not just about “structuring a market, a new segment of economic activity”. “I believe that the legalization and structuring of this market would greatly benefit the country by creating jobs and economic development that could lead to various regions of the country”, he pointed out.

“In other countries, gambling are responsible for an important share of tax revenue. The approval of a law that makes it possible to explore the gaming activity in Brazil would fully serve the interests of the country and society, in addition to contributing to the realization of the constitutional principle of free enterprise”, he added.

Lawyer Marcelo Mattoso Ferreira also supports the Legal Framework for the Games. “This market moves billions of dollars a year. If the activity is implemented as a sport, with a leisure nature, containing awareness policies and forms of auditing to avoid fraud and possible loopholes for money laundering, I cannot find any disadvantages”.

Ferreira continued: “this is an excellent target for taxation, but care must be taken with the way of taxation, otherwise it may end up creating a bottleneck and discouraging the growth of the segment. Taxation has to happen, but in a way that makes it viable and attracts investments, not the other way around.”

Questions about the Legal Framework for Gambling

The taxation of gambling was one of the most controversial factors during the House vote. Jantalia pointed out: “The controversy was based on two aspects: first, whether the games should observe a tax regime that is identical, similar or different from other activities. A part of the parliamentarians understood that the games should receive favored treatment, as this is a new activity in Brazil, to be stimulated”.

“On the other hand, there were the parliamentarians who understood that the activity, as it was potentially harmful – in their view – to society, should contribute to a slightly higher taxation. This is a cross-party debate. What it seems to me, however, is that, as it is an economic activity similar to other entertainment activities, it makes no sense to attribute a very different taxation to it”, he added.

In addition, the Contribution for Intervention in the Economic Domain (Cide) triggered several debates at the time. “There was a lot of discussion about the Cide percentage; percentages up to 35% were considered. Cide is a very interesting tax species, because it proposes to face the so-called extrafiscality”.

“It does not have a purely collection purpose, it often aims to allocate these resources to the cost of negative externalities, or possible harm to that activity. If it is a fact that Cide seems adequate in the case of the gaming industry, it is also a fact that it cannot have a large percentage, so as not to make economic activity unfeasible”, he argued.

Proposal encompasses different game activities

Another question raised was that the project includes very different games such as casinos, bingos, Jogo do Bicho and sports betting. For Jantalia, all these activities can be in the same legislation.

“I believe that, to the extent that the Brazilian state decides to look into the issue, the decision to be taken must be one: there is no reason to release one or the other modality and not the other. Either the games are released or they are not released. To a greater or lesser extent, all types of games face the same challenges and raise the same opportunities. The industry needs to be considered in its entirety.”

Mattoso also supports that, even if each type of game has its own characteristics, it is possible “to treat them all in a single legislation, as long as there is differentiation where necessary. The legislation needs to be efficient so that the integrity of the market as a whole is maintained”, he concluded.