The regulation of online betting in Brazil is a challenge, as the advancement of this type of game is much faster than the legislative process. Bets, or as they are known, sportsbooks, are associated, almost all of them, with football games, which is the main sport in several nations.
But the end of regularization in the country is coming to an end and regularized games are scheduled to start in January 2025.
Sportsbooks can generate billions of reais in taxes
But why is regulation so important? When regularizing an activity, the government can monitor and collect taxes. So, betting houses can generate billions of reais in revenue, in addition to creating jobs and new businesses.
Therefore, global corporations end up incorporating small companies in the online betting sector, attracted by the business potential of the Brazilian market.
According to the Statista data platform, online betting:
- They could generate up to US$45 billion in 2024
- The projection is to reach US$65.1 billion in 2029
- Annual business growth would be 7.4%
In Brazil, consultancies estimate that online betting totaled R$120 billion in 2023, with a projection of reaching R$150 billion in 2024, according to Ricardo Bianco Rosada, from brmkt.co.
The number of companies operating in the country is imprecise, varying between 200 and 1,200, depending on the source. Regulation will allow a number closer to reality, making the market more attractive for companies.
The experience of countries such as the United Kingdom, Italy and Spain shows that regulation can generate significant tax revenue and create jobs in areas such as customer service, website operation and technology. These vacancies must be internalized with the obligation for bets to establish themselves in Brazil, leaving structures abroad.
“The rules bring legal security to investment, guarantees to bettors and a search for responsible gambling. And, of course, new tax resources”, says Ricardo Bianco Rosada, from brmkt.co.
UK has strict rules for betting
The United Kingdom, a reference in the formalization of online betting, collects 4 billion pounds (R$29 billion) per year in taxes, with a 15% rate on Gross Gaming Revenue (GGR) and income tax exemption for winning bettors.
Strict rules and suspicious activity monitoring prohibit players and referees from betting on football, and authorities are discussing a new advertising code for betting.
With more than 60 thousand direct jobs, the United Kingdom has 1.6 thousand betting shops. In Brazil, the expectation is that market consolidation will lead to mergers and acquisitions, as has already occurred in other countries.
In 2020, British companies Flutter Entertainment and The Stars Group merged into the largest online betting company in the world.
“Maintaining a bet requires a large investment in technology, cybersecurity and marketing. The expectation is a consolidation of the market in Brazil and the world, with smaller ones being bought or merging”, says Caio de Souza Loureiro, partner in the Gaming & E-business area. sports, from TozziniFreire Advogados.
In Brazil, a 2018 law determined that online betting would be a type of lottery, but without additional rules, leaving the activity in legal limbo.
Recent federal regulation stipulated a 12% tax rate on GGR and 15% income tax on prizes for bettors. Bookmakers must operate in Brazil and pay a grant of R$30 million to operate for five years.
Bookmakers need to report suspicious activity
The Ministry of Finance is working on a new ordinance for the sector, considered essential by bets to estimate gains in the new regulated scenario. The ordinance will define whether games such as “crash games” and “slots” will be able to work in Brazil, as long as they present a progressive winning table throughout the game.
But in Latin America, Colombia was the pioneer in 2015, creating a federal supervisory body. In Argentina, regulation is the responsibility of the provinces. In Spain, betting revenue has tripled since 2011, with taxation of 20%. In the US and Canada, states are free to create their own rules for online gambling.
Recently, a Brazilian ordinance ordered betting platforms to identify and classify gamblers’ risks, reporting suspicious transactions to the Financial Activities Control Council (Coaf).
The pandemic and the advancement of technology, such as smartphones and Pix, boosted online betting. In Brazil, 19 of the 20 Serie A clubs have betting houses as sponsors, but limits on this sponsorship should only occur at a later stage.
The Brazilian potential is enormous, with estimates indicating that the market could represent 1% to 2% of GDP. The Minister of Finance, Fernando Haddad, estimates raising R$2 billion with the regulation this year. So far, three companies have filed a grant request: Superbet and Kaizen Gaming Brasil, owner of the Betano and Rei do Pitaco brand.
In addition to these, four others are in the process of sending documentation, with requests to be made by August 20th. Authorizations will be issued by the Prizes and Betting Secretariat (SPA) by the end of the year, so that the regulated market will operate from January 1st.
