The Ministry of Finance is in a race to unify the rules on authorizations for online betting companies in Brazil. A working group was formed within the scope of the National Council for Financial Policy (Confaz) to seek consensus among the states. However, Rio de Janeiro is the state that most resists this unification.
National Licenses vs. Local Licenses
Currently, online betting companies can opt for a national license or just a local license. The national license allows you to operate throughout the country, while the local license restricts the operation to the federation unit where it was registered.
The Ministry of Finance believes that companies with local licenses should only serve gamblers in the state where they are registered. However, Rio de Janeiro has accredited betting houses to operate nationally, causing discomfort in other states and the federal government.
But, in March, the Ministry of Finance notified the Rio de Janeiro Lottery (Loterj) to interrupt the national accreditation of bookmakers. The ministry argues that the current accreditation does not limit the companies’ operations to the territory of Rio de Janeiro.
Thus, the main concern is the possible “fiscal war” between states, with different rules to attract companies. Rio de Janeiro, for example, defined a grant of R$5 million and a rate of 5% on revenue.
The national license requires payment of 12% of gross revenue and a grant of R$30 million. Rio insists that local authorization can be valid for national operations and is in legal dispute with the Union to expand these licenses.
According to the National Association of Games and Lotteries (ANJL), three states have already started authorization processes for online betting: Rio de Janeiro, Paraná and Paraíba. In total, 22 companies are able to operate in these states.
Paraná limited it to 5 licenses, all of which are already operational. Paraíba authorized 5 operators, but none started operating. In Rio, 5 companies are in operation and 7 are in the evaluation phase.
Challenges for the online betting market
Current law provides that the marketing and advertising of state lotteries is restricted to persons located within the state’s boundaries. This rule is a point of divergence, with Rio being the state most resistant to unification.
The other states agree to respect territoriality, but each defines its own tax rate and specific rules. Thus, the latest Finance ordinance opened registrations for online betting companies to regularize nationally.
Therefore, companies need to have headquarters in Brazil, economic and financial capacity, policies to prevent money laundering and responsible gambling, and good advertising practices.
The regulatory process will still have two more phases, with inspection rules and combating money laundering. The objective is to identify fraud and monitor bettors to prevent addictions.
Therefore, the Prizes and Bets Secretariat was created in February at the Ministry of Finance, but authorization for operation and monitoring will be shared with the Ministry of Sports.
Therefore, unifying rules for online betting is crucial to avoid a tax war and ensure effective regulation. Therefore, progress in negotiations through Confaz is an important step towards reaching an agreement that benefits everyone involved.
