The Ministry of Finance is working to apply the taxation of online betting, which is currently exempt in Brazil. After legalization through a presidential decree in 2018, the market has yet to be properly regulated.
Online betting on sporting events provides the opportunity for interested parties to place bets on football clubs in the interior of the country, even on decisive NBA games. According to Correio Braziliense, the sector should earn BRL 12 billion in 2023, an increase of 71% compared to the earnings of 2020, which were BRL 7 billion.
The law in force only provides that applications can operate in the country as long as they are headquartered abroad, do not have physical points of sale and operate in international internet domains. The new regulation will require companies to be headquartered in Brazil, improving inspection and collection.
The taxation should be implemented via provisional measure in April. The government has not yet announced what type of taxation will be implemented and what the rates will be, but the Minister of Finance, Fernando Haddad, has already revealed that it should come through contributions and not taxes. It is expected that the tax will be applied on the companies’ gross profit and licenses for them to operate.
Economist Rica Mello recalled that Brazil is one of the few countries that does not tax online betting. “This market is taxed in many other countries and there is space here for this tax to exist. Games that are organized by the government through lotteries, such as mega-sena and lotofácil, all pay a percentage close to 30% when the player wins, and this is an important amount of government revenue. So much so that it has been discussed that the taxation of online betting could mean up to R$ 8 billion in revenue in the year”.
“This tax should probably be somewhere between 10% and 20% of the value of the bettor’s prize and, of course, there is a danger that bettors place their bets in companies outside Brazil, because some other countries do not charge taxes”, added.
Online betting industry support
The news was very well received by the online betting industry, which has long sought to regulate and increase the market in Brazil. Taxation should generate much more legal certainty and space for business growth. The expectation is that the segment will have gains in collection of around R$ 20 billion in annual revenues, generating R$ 700 million annually to the National Treasury.
“Faced with the current economic scenario experienced by our Brazil, a very important point in this discussion about regulation is that the activity will have conventional tax collection and will contribute to the supply of jobs, directly impacting the progress of our economy” , explained businessman and sports trader Antônio Mandarrari.
“A large part of society does not have knowledge of the way the sector is doing, companies are authorized to operate in the country, however, as it is not a regulated activity, all are headquartered abroad, and tax charges are not collected by the government Brazilian”, added Mandarrari.
Lottery houses are also awaiting regulation. To Correio Braziliense, the president of the Brazilian Federation of Lottery Companies (Febralot), Jodismar Amaro, said: “As soon as the provisional measure comes out, we are going to file a project to seek participation, so that the lottery houses are inserted and we can do it too this type of service. There are 13 thousand lottery outlets in Brazil, we already have the network ready and we want to be included somehow”.
As the law currently stands, the gambler would pay 30% of the result of the bet, the same as a winner of the Caixa Econômica Federal lotteries. According to sports lawyer Luciano Andrade Pinheiro, partner at Corrêa da Veiga Advogados, if the regulation maintains the percentage of lotteries, the sector will be harmed.
“This needs to change urgently. If the government maintains this percentage, bettors will not be encouraged to access regular Brazilian sites and will continue to bet abroad through the internet”, he evaluated.
Lawyer Gerlio Figueiredo, member of the Brazilian Institute of Criminal Sciences, highlighted the importance of taxation, which should bring more security to gamblers. “Without regulation, as it is today, companies operate abroad and operate here, without generating any direct benefit to the country,” said Figueiredo.