It is not new that people talk about the ability to generate large revenues from the betting sector. In Brazil, there are no regulations to enable adequate betting taxation, but the topic is already being debated and the benefits of this collection for the country are increasingly clear.

The potential of the Brazilian market is immense and the current government is already working to ensure an ideal path for the iGaming industry in the country. Furthermore, the high popularity of sports betting requires some security measures to be taken for both bettors and athletes.

In his column ‘Olha Olímpico’ on UOL, Demétrio Vecchioli, detailed how the taxation of bets would be able to ‘fatten’ the Olympic coffers, the CBF and the national clubs.

Read the full article on taxation of bets

The publication of a Provisional Measure on sports betting will not only create rules to prevent the manipulation of results. The MP will also create mechanisms for taxation of betting, fattening public coffers by a few billion reais a year and also benefiting clubs, Olympic sports and confederations.

The CBF tries to ensure that the resources are not understood as “public”, so that it is not subject to inspection by the Federal Court of Accounts (TCU).

The way in which taxes arising from sports betting will be distributed is already guided by the old Agnelo/Piva Law, although it may be discussed again when the MP reaches Congress. In 2021, then-president Jair Bolsonaro (PL) sanctioned that, in the case of the “fixed quota bet”, part of the proceeds must be destined “to Brazilian sports entities that assign the rights to use their denominations, brands, emblems, anthems , symbols and the like for publicizing and executing the fixed odds betting lottery”.

In other words, a part of the pie goes to the object of the bet: the clubs involved in the match and the organizing body. Although the vast majority of companies that operate sports betting in Brazil do not open their data, it is known that football accounts for a huge part of the bets in the country. When the brands involved in the bet were foreign, the tax would be divided between the CBF and all Brazilian clubs.

CBF and public money

The CBF has the practice of not using public resources directly. This allows it to be treated as a private company, which is not subject to inspection by the Federal Court of Accounts (TCU).

Although football is an Olympic sport, the CBF is the only confederation linked to the COB that does not receive funds from the Lottery Law. The entity prefers this to subjecting itself to inspection and to the rules of articles 18 and 18-A of the Pelé Law, which cite, for example, the limit of one presidential reelection for entities that want to “receive resources from the direct and indirect federal public administration” .

Even though fixed odds bets (bets on real events) are operated by private companies (betting sites), the lottery modality is, by law, an “exclusive public service of the Union”. Hence the interpretation that the resources that reach clubs and confederations from these bets are public.

Information is already circulating in Congress that CBF will try to insert some device in the MP’s original law, when it is discussed there, so that the amount does not make it either enforceable or subject to the Pelé Law. The government should not ally itself with the confederation in this discussion.

Basketball and tennis should have extra money

Unlike the lotteries managed by Caixa, which are expected to distribute around BRL 400 million to the COB in 2023, in the case of sports betting, the impact on the Olympic committee is negligible. The entity only organizes the School Games and, at most, could raise some value during the Olympic Games.

Advancing the rule that determines that, in bets on international events, the Brazilian sport administration entity will benefit, who should win are the Brazilian tennis (CBT) and basketball (CBB) confederations.

While this text was being written, one of the main betting sites operating in the Brazilian market offered the possibility of betting on 34 football games, 15 basketball games and 30 tennis games, compared to four volleyball games and one handball game.

It is common for these sites to promote the possibilities of betting on NBA games and on matches of the main tournaments of the ATP and WTA tennis circuits. The more money bet on these events, the more money in the confederations’ coffers.

By this rule, the CBV and volleyball clubs (given the volume of bets also in the Super League) and sports confederations that are not Olympic, but have a betting tradition, such as turf, darts, American football and baseball, should also win.

Value to be calculated

Market projections point out that the Union can collect between R$ 6 billion and R$ 9 billion in taxes in the first years after the regulation. But forecasts vary widely and the numbers presented range from R$ 1 billion to R$ 20 billion. Until it has a reliable projection, the government will not edit the MP.

The sport is entitled to a percentage of 1.63% which is not exactly calculated on this amount. The account is more complex, it involves an incidence that has yet to be defined, and therefore it is impossible to say how big this cake will be. Possibly, the account is in the hundreds of millions of reais a year.