PM for sports betting is signed

This Tuesday (25), the government published in the Official Gazette the PM for sports betting, which establishes the regulation of the sector in Brazil.

The rules are already in effect, however, to remain valid, they will need to undergo an analysis by the National Congress within 120 days.

Bookmakers will be subject to a tax of 18% on the so-called “Gross Gaming Revenue” (GGR), which represents the revenue obtained from all games after payment of prizes to players and deduction of income tax (IR) on the prize pool.

Sports betting PM opens a window of opportunity for Brazil

In May, the Ministry of Finance had presented a proposal that contemplated the taxation of bets, together with measures to prevent the manipulation of games.

At the time, the government suggested a 16% tax.

According to Treasury projections, the regulation could yield the government up to R$ 2 billion in revenue in 2024.

In the following years, estimates vary between R$ 6 billion and R$ 12 billion.

The sports betting PM promotes amendments to Federal Law No. 13,756, which was published in 2018 to regulate the exploitation of fixed-quota betting lotteries by the Union.

From now on, it will be the responsibility of the Ministry of Finance to grant authorization for the operation of bets, without restriction on the number of licenses, enabling commercialization through all commercial distribution channels, whether physical or virtual.

How will sports betting be taxed?

An 18% tax on the “Gross Gaming Revenue” (GGR) will be established for betting companies, leaving 82% of the revenue for the maintenance of operators’ operations.

This fee is distributed as follows:

• 10% earmarked for contributions to social security;
• 0.82% for basic education;
• 2.55% to the National Public Security Fund;
• 1.63% for clubs and athletes whose names and symbols are related to betting;
• 3% destined to the Ministry of Sport.

Initially, in May, the Ministry of Finance had proposed a rate of 16%.

However, with the publication of the Provisional Measure, the transfer to the Ministry of Sport was increased from 1% to 3%, resulting in an increase in taxation to 18%.

According to the 2018 law, taxation was up to 5% on companies’ revenue after payment of prizes, income tax on prizes and contribution to social security, with a rate of 0.10% for physical bets and 0.05% for online bets.

Sports betting MP establishes rules to ensure sector integrity

In addition, new rules have been established regarding the prohibition of participation in sports betting for the following categories of people:

1. Public agents who work in the inspection of the sector at the federal level.
2. Under 18 years old.
3. Individuals who have access to computerized fixed odds lottery systems.
4. Persons who may have an influence on the results of matches, such as coaches, referees and athletes.
5. Persons enrolled in national credit protection registers.

The ban also extends to spouses, partners and up to second-degree relatives of public inspection agents, people with access to betting systems and those who can influence the results of games.

Other standards included in the PM are as follows

1. Prizes not claimed by winners within a period of 90 days will be directed to Student Financing (Fies) until July 2028. After that date, funds will revert to the National Treasury;
2. Partners and shareholders of betting companies may not exercise management functions or have participation in sports organizations. Companies will also have the obligation to inform the Ministry of Finance about events suspected of manipulation of results;
3. The PM requires operators to carry out awareness actions for gamblers about gambling. The Ministry of Finance will be responsible for regulating the marketing strategies for these actions;
4. Bookmakers are prohibited from acquiring, licensing or financing the acquisition of rights to sporting events held in Brazil for transmission, distribution or any other form of display of sounds and images, by any means.

Companies without a license or in violation of the law will be fined

Companies that place bets without proper authorization from the Ministry of Finance or that, despite having the authorization, offer services in violation of the legislation, will be subject to penalties.

Fines can vary from 0.1% to 20% of the company’s revenue, with a maximum limit of R$ 2 billion per infraction.

In addition, the operating license may be revoked, and the activities of the companies suspended.