The long-awaited Provisional Measure proposal for the regulation of fixed-quota sports betting in Brazil has just been released by the Federal Government.
The text also provides for taxation of revenue from companies and prizes awarded to gamblers.
The rules must be published in the MP, which has immediate validity, but needs to be voted on by Congress.
Ministry of Finance expects to raise up to R$ 15 billion with online betting.
In the article published today, May 11, by the channel G1.globo.com, are all the points that cover the Measure.
See below:
1. Is sports betting legal?
Bets currently placed in Brazil are allowed by a 2018 law, which authorized the online modality on sports results. However, there was no regulation of this activity, which prevents it from being taxed today.
Companies do not have a CNPJ registered in Brazil, for example, and taxation is levied only on financial transactions (mediated by banks).
2. Why does the Government intend to regulate the practice?
With the regulation of the practice, the government intends to establish clearer rules, providing for limits and sanctions, in case of non-compliance with the rules. Another objective is to curb fraud and crimes that may be committed in this universe.
In addition, the measure allows for the taxation of sports betting, at a time when the government is making efforts to balance public accounts.
3. What does the proposal provide for regulation?
The proposal provides for a series of rules to prevent illegality in betting, in addition to sanctions in case of non-compliance with the rules. Look:
Players, referees, managers and minors under 18 are prohibited from betting;
The betting operator must promote informative actions to raise awareness of bettors and prevent pathological gambling disorder, that is, practices to prevent betting from becoming an addiction;
Sports events subject to betting must have actions to mitigate match-fixing and corruption;
The text states that it is an administrative infraction to execute, encourage, allow or, in any way, contribute or compete for practices that violate the sporting integrity, the uncertainty of the sporting result, the transparency of the rules applicable to the sporting event, the equality between competitors, as well as as any other form of fraud or undue interference capable of affecting the fairness or healthiness of the conduct associated with the proper performance of the sporting activity;
Companies will have to be qualified to provide the service related to official sporting events, organized by federations, leagues and confederations. According to the government, companies that are not qualified will incur illegal practices and will be prohibited from carrying out any type of advertising, including in digital media.
Among the sanctions for companies that fail to comply with the rules are cancellation of authorization, termination of permission or concession. In addition to a fine in the amount of 0.1% to 20% of gross revenue, limited to R$ 2 billion.
4. What does the proposal provide for taxation?
The text released by the Ministry of Finance provides:
According to the government, the MP will predict that companies will be taxed at 16% on the so-called “Gross Gaming Revenue (GGR)”, that is, the revenue obtained from all games played, subtracting the prizes paid to players.
There will also be a 30% Income Tax tax on the prize obtained by the gambler, but with exemption for prizes up to BRL 2,112.
According to the Ministry of Finance, a new secretariat will be created within the portfolio, which will be responsible for analyzing documents for approval or not of the accreditation of betting companies in the country. The agency will also monitor the volume of bets and collection.
5. How will regulation be implemented?
According to the government, the idea is that the proposal be implemented via a provisional measure. That is, that is, with the rules already in force and a period of 120 days for voting in Congress. If it is not analyzed by deputies and senators in the period, the norm loses its validity.
The rules must come into effect as soon as they are published in the “Official Gazette”. However, there is still no prediction of when this should happen
The text was sent to President Luiz Inácio Lula da Silva (PT) on Wednesday (10). It must be signed by the ministries of Finance, Planning and Budget, Management and Innovation, Health, Tourism and Sports.
6. What is the government’s revenue expectation?
In April, the Minister of Finance, Fernando Haddad, said that he hopes to raise between R$12 and R415 billion from taxation on sports betting.
According to the folder, the collection will be destined to areas such as public safety, basic education, sports clubs and social actions.
The 16% charged on revenue obtained by companies in the sector will be divided as follows:
2.55% to the National Fund for Public Security, for actions to combat match-fixing, money laundering and other acts of a criminal nature that may be practiced in the context of betting or related to it.
- 0.82% for basic education
- 1.63% for sports clubs
- 10% to social security
- 1% for the Ministry of Sports
7. How can regulation curb crimes?
This Thursday (11), in an interview with GloboNews, Minister Flávio Dino reinforced that the regulation of sports betting can help curb crimes.
“Regulation can guarantee the closure of spaces where these real gangs are operating, practicing larceny at the very least and failing to comply with sporting ethics […] to eventual international ramifications”, he said.
According to the minister, regulation needs to take place on two fronts. In the tax area, to ensure collection and the setting up of an inspection structure, in addition to another extra-fiscal structure, to ensure good sports practice.
“Supervision is especially needed, because the evidence is very vehement. You even see bizarre things happening in even committing penalties, fouls, anyway. The intercepted dialogues themselves show that”, he said.
Dino also stated that, in theory, there may even be an order to suspend betting in the country, but that this hypothesis is not currently discussed within the scope of the government.
8. How can regulation prevent crimes?
Also according to the article by G1.globo.com, Minister Flávio Dino said that the regulation of sports betting can help curb crimes.
“Regulation can guarantee the closure of spaces where these real gangs are operating, practicing larceny at the very least and failing to comply with sporting ethics […] to eventual international ramifications”, he said.
According to the minister, regulation needs to take place on two fronts. In the tax area, to ensure collection and the setting up of an inspection structure, in addition to another extra-fiscal structure, to ensure good sports practice.
“Supervision is especially needed, because the evidence is very vehement. You even see bizarre things happening in even committing penalties, fouls, anyway. The intercepted dialogues themselves show that”, he said.
Dino also stated that, in theory, there may even be an order to suspend betting in the country, but that this hypothesis is not currently discussed within the scope of the government.
