The sports betting segment welcomed the news that the Ministry of Finance is working to start taxing the activity. This happens because taxation will arrive with the regulation of the service, which will provide much more transparency and legal certainty for the industry.
With no clear rules since the release in December 2018 still under Michel Temer’s government, companies operate platforms abroad and remain in an uncertain situation. However, the sports betting sector should earn 12 billion reais this year and the formalization of specific rules will facilitate its growth.
According to the president of the Instituto Brasileiro Jogo Legal, Magno José Santos, the total value generated on the sites is much higher, around 100 billion reais. The context was deepened in a report published on the G1 portal and produced by BBC News Brasil.
Check out the full article on the sports betting sector in Brazil:
The Ministry of Finance is working to start taxing the sports betting website sector, which has experienced a growth boom in Brazil since 2018, when they were released to operate in the country and started to sponsor almost all the main football teams, male and female. .
Contrary to what common sense might imagine, the news was well received in the gaming sector, which for decades has been trying to legalize and expand the private betting market in the country. This is because the taxation will come together with the regulation of the service, which will bring more legal certainty and business potential, say representatives of the sector interviewed by BBC News Brasil.
Although a law at the end of 2018 allowed this business, market regulation has yet to be implemented. Without clear rules, companies have operated these sites from outside Brazil, free of local taxes.
The estimate of the BNL Data portal, specialized in the gaming market, is that this segment will earn BRL 12 billion in 2023, an increase of 71% compared to the earnings of 2020 (BRL 7 billion).
According to the founder of the portal and president of the Instituto Brasileiro Jogo Legal, Magno José Santos, the total amount transacted on the sites with receipt and payment of sports betting is much greater, turning around BRL 100 billion.
“In fact, (the announcement of the tax) is not displeasing at all. The sector has been anxiously awaiting the regulation of the activity in Brazil for over four years now. It was a very big frustration that this was not regulated last year , before the World Cup,” lawyer Luiz Felipe Maia, a specialist in the sector, told BBC News Brasi.
“The companies I represent are anxious to see the Brazilian market regulated, so that they can operate locally, pay taxes and generate jobs in Brazil”, he reinforced.
Ban on gambling started in 1946
The gambling market was banned in Brazil in 1946, under the government of Eurico Gaspar Dutra, on the grounds that it would be harmful to morals and good customs. Until then, casinos operated in Brazil and were popular entertainment venues, offering concerts and restaurants.
This did not, however, prevent the existence of illegal practices in the country, such as the Jogo do Bicho and slot machines, often controlled by violent criminal groups. Bingos are not allowed today, but there were times when they were allowed, in the 90s.
An exception to the prohibition created by Dutra that has lasted for decades are lottery games, which were operated exclusively by Caixa Econômica Federal since 1961. As of 2020, however, they started to be offered by state and municipal governments, after the Federal Supreme Court end the Union monopoly.
A law passed in 2018, under the government of Michel Temer, allowed the operation of sports betting sites, opening up a slice of the market to private companies. However, the regulation of this industry stalled in the Jair Bolsonaro government, although the law itself predicted that it should have been adopted by 2022.
The sector attributes the delay in regulation to opposition from conservative groups, especially the evangelical segment, which was widely heard by the former president.
The theme was once again underway in the new government, eager for new sources of revenue to pay for the increase in social spending and works, promised by President Luiz Inácio Lula da Silva.
The Ministry of Finance is still finalizing the details of how this collection would work, in order to send a proposal to Congress. The Minister of Finance, Fernando Haddad, told the UOL portal that the collection could be between R$ 2 billion and R$ 6 billion.
The idea under discussion is to create a tax on company earnings and a tax on bettor earnings. In addition, the government would collect from the sale of licenses for companies to operate. There is discussion of charging BRL 30 million for the right to operate for five years.
The sector is divided over these values. For lawyer Felipe Maia, a lower amount, such as R$ 5 million, would be more appropriate to attract a greater number of companies to legality.
Entrepreneur André Feldman, president of the newly created National Association of Games and Lotteries, prefers a higher value, precisely so that the market does not have a very large number of sites. On the other hand, he defends that the license lasts ten years instead of five, to increase the investment planning horizon.
“I think the higher the cost, the better. The easier it is for the government to inspect and collect. I prefer to work in a universe of one hundred, two hundred companies, than two thousand”, he emphasizes.
“For the correct businessman, with the size of the market, the value of the grant is what matters the least”, he added.
The industry also hopes that regulation will increase oversight and control against betting manipulation, something that causes financial and reputational damage to companies.
In February, the Public Prosecutor’s Office of the State of Goiás (MP-GO) carried out the “Maximum Penalty” operation against a criminal association that would have manipulated the results of games in the final round of Series B of the Brazilian Championship last year, with the aim of profiting from betting on sports sites.
In the scheme discovered, players from at least three teams would receive BRL 150,000 to commit penalties in the first half of the match. One of them, however, was not scheduled and tried to convince another to commit the penalty, which ended up leading the club’s management to discover the case and report it to the MP. The estimate of the bettors would be to earn BRL 2 million with the manipulation, according to the investigation.
Against addiction, USP psychiatrist defends restrictions to the sector
The vertiginous expansion of the market, however, is accompanied by a worrying phenomenon, the increase in addiction to these betting sites, says psychiatrist Hermano Tavares, coordinator of the Pathological Gambling Outpatient Program (Pro-Amjo) at the Hospital das Clínicas of the University of São Paul (USP).
According to him, there has been a change in the profile of those assisted by the program. Before, Pro-Amo’s audience was mainly made up of older people, addicted to slot machines, a game that is illegally operated in Brazil.
From 2018, however, more people in their 30s and 40s began to arrive, seeking help to deal with their addiction to sports betting. Tavares estimates that this public is already a quarter of the approximately 80 new people that the program welcomes per year.
In his view, the regulation that will be adopted should have strict rules to reduce the problem, such as allocating a part of the companies’ earnings to finance the expansion of the service network for gambling addicts, which is still very small in the country.
He also argues that advertising should be prohibited, as in the case of cigarettes, or at least restricted, as in the case of alcoholic beverages. The idea, which would hit one of the main ways of financing football in the country today, seems not to be being considered at the moment by the federal government.
BBC News Brasil sent some questions about the regulation of the market to the Ministry of Finance, which, in its response, defended the measure as a way of expanding the collection and inspection of the sector, to avoid manipulation of bets and money laundering.
The folder, however, did not respond whether the regulation will bring any restriction to the sponsorship of football clubs by betting sites, due to the increase in addicts.
“I think there should be a ban on explicit sponsorship that could affect the vulnerable population, particularly minors. Why does this sector have to have preferential treatment in relation to cigarettes and drinks?”, asks Tavares.
“I’m particularly bored of watching my team’s or national team’s games and being the whole time being impacted with invitations to bet”, he complains.
To get an idea of the importance that this type of sponsorship has gained in Brazil, today 19 of the 20 clubs in the Brazilian championship series A receive funds from these companies.
Flamengo, for example, signed a two-year contract with Pixbet at the end of 2021, worth a total of R$ 48 million, which thus bought the space on the shoulder of the team’s official shirt to advertise its brand.
Pixbet also sponsors Corinthians, Santos, Vasco and Cruzeiro, among other smaller clubs. Other examples are Betano (Atlético-MG and Fluminense), Esportes da Sorte (Grêmio) and Sportsbet.io (São Paulo).
Lawyer Felipe Maia defends the importance of sponsorship at this time of market opening, so that users can identify legal companies. With the regulation, only sites that buy licenses from the government will be able to operate.
“In regulated markets, there is a protection structure for people with compulsive behavior, such as a self-exclusion register, in which the player or family registers the user’s document, which is prevented from betting. “, he argues.
“There are things that cause much more damage, like alcohol and cigarettes, and none of them have that kind of protection,” he added.
European countries have increased restrictions
According to a survey of Marketing professors at the University of Bristol, in the United Kingdom, restrictions on advertising on these sites have grown in Europe.
In Italy, all marketing of gambling on TV, radio, print and internet was banned in 2019, including sponsorship of football teams. “This general ban was introduced shortly after a study highlighted that 3% of the Italian population suffered from gambling damage,” says an article published by Bristol professors on The Conversation portal.
Germany, Belgium and the Netherlands also have tough restrictions, such as banning advertising during games.
The United Kingdom, where sports betting sites also finance major football clubs, is currently discussing banning advertising for these companies on the front of official shirts.
The English Football League, sponsored by Sky Bet, which manages the second, third and fourth divisions, says this would mean a loss of £40m a year (about R$ 256 million). for its 72 clubs.
The association that represents the sector (Betting and Gambling Council) argues that the “overwhelming majority” of the 22.5 million people who bet every month in the United Kingdom do so “safely and responsibly”.
The sector also says that the percentage of people who have problems with gambling would be 0.3% of the adult population, which would be low by international standards.
Hermano Tavares cites larger numbers for Brazil and draws attention to the impact of the problem also on the families of addicted people.
“Throughout their lives, 1% of the population will meet criteria for gambling disorder and another 1.3% will have a partial syndrome, or what we call problem gambling. of the population”, says the USP psychiatrist.
“And if you consider the exposure rate, which is the person who does not gamble, but lives with a gambler, and consequently suffers from all his problems, such as unemployment, extreme debt, default, being deprived of opportunities, this can reach 10% of the population”, he adds.
However, despite being personally against the legalization of gambling, the USP psychiatrist says that this decision is not up to the health sector alone, since there are also economic arguments favorable to the activity, such as job creation and tax collection.
“It’s not up to the health staff to define whether an activity like this will be legalized or not. The health staff will point out, quantify, what the risks and benefits are, and sometimes they won’t be able to say whether the risks outweigh the benefits or the opposite. “, emphasizes.
