The bookmaker sector has exploded in Brazil since 2018. At the time, then-President Michel Temer (MDB) sanctioned Law 13,756, which authorized the operation of the sites. However, the permission is temporary and its term ends in December. The process aimed at definitive regulation of the sector has not yet been finalized.
But, this temporary authorization does not authorize betting companies to have headquarters in Brazil. With companies headquartered abroad, taxation is limited to punters. While sites hosted on servers outside Brazil do not pay taxes.
If this legal situation were resolved, federal revenue would grow as much as the financial transactions of bookmakers. This Monday, the 24th, the website O Dia published an article detailing how this legal limbo of the betting market impacts the collection of taxes to the public coffers. Check out the news below:
Outdated regulation of betting sites hurts tax collection
The market for online sports betting sites has grown exponentially in the country in recent years. An increasing number of Brazilians invest money in these platforms, which has brought about the rapid expansion of the segment. Despite being a billionaire market, the legislation in force that regulates the activity of virtual bookmakers is outdated. If the legal system were modernized, the federal tax collection would increase in the same proportion as the financial movement of companies.
In 2018, then-President Michel Temer (MDB) sanctioned Law 13,756, which legalized the operation of sites, called fixed-quota bookmakers. However, the permit is provisional and expires in December. A definitive regulation has not yet taken place. According to lawyer Luiza Leite, a specialist in Tax Law, the lack of modern standards for the functioning of platforms creates a scenario of legal uncertainty.
The provisional permission does not authorize sports betting companies to be based in the country, since, according to the Criminal Misdemeanors Act, the establishment and exploitation of gambling is prohibited. For the lawyer, the lack of adequate legislation and efficient inspection generate tax distortions. With the companies headquartered outside of Brazil, taxation affects only gamblers, when they withdraw the winnings from the bets — about 30% of what they earn is taxed. However, sites hosted on servers abroad do not pay taxes.
“The big criticism is this tax injustice. The idea is to think of a system in which taxation is not only on those who are capturing the bet, but also on the entity that is participating in this activity, precisely so that you have a better balance and that you can reduce this tax burden that today is high. What happens many times, they end up opting for a foreign company that has more attractive values”, clarified Luiza.
Fostered by the World Cup, the market moves R$ 160 million per day in the country. In addition, all Serie A teams are sponsored by these platforms. Flamengo, for example, which has the biggest crowd in Brazil, maintains a partnership with the website PixBet — which, according to Portal BNL Data, is in fifth place in the ranking of the most sought after bookmakers by Brazilians. It is estimated that around 450 platforms in this segment operate in Brazil indirectly, since the vast majority do not have representatives in the country.
The market attracts more and more international companies, which see in Brazil a competitive advantage, since there is no collection of taxes by the federal government. In a survey carried out by Portal BNL Data, the absence of taxation of betting sites generates losses to the public coffers that reach R$ 6.4 billion per year.
“The lack of modern regulation not only drives away new types of national investment in the sector, but also causes the government to stop collecting significant amounts, which could contribute to our economy”, added the lawyer.
Diego Vasconcelos, Master in Economics at UFRGS, highlights that the lack of taxation affects other economic sectors, which would gain additional momentum if the collection were done correctly. According to him, a properly regulated activity can bring benefits to the social area in Brazil. Vasconcelos explains that the damage caused by the outdated legislation goes beyond the collection of taxes by the Union. According to him, the current scenario can be disadvantageous for the gambler himself, in addition to creating a feeling of informality in customers.
“In terms of betting operators — and especially international ones, which are the main ones in Brazil — we don’t have any type of taxation or regulation. So it’s this very informal thing. We could generate revenue for the Union. We lose a lot of potential in this market”, says the economist.
Inspection and fraud
Without clear regulation, the supervision of sports betting houses becomes precarious and can attract illegality to the sector. In August, the Public Ministry of Rio (MPRJ) revealed that bookmaker Rogério de Andrade had expanded his business to the betting universe. After searching the offender’s house in Araras, in the municipality of Petrópolis, agents found clues that pointed to a betting site called Heads Bet. In a quick search, they identified the platform, which allowed betting on 15 sports.
Several sports betting sites have already closed their doors, either due to claims of late payments or mismanagement. Premiwin is one such case. The platform closed down after several gamblers complained about the lack of payment of prizes or because they were unable to withdraw account balances. Flamantis, created in 2014, also suddenly disappeared from the market, harming gamblers – who also lost the values they had in their accounts.
Risk for young people
The inefficient enforcement of these online bookmakers also allows minors to enter the world of gambling. High school student A.L., 17, revealed that he got to know the sites through lives and advertisements on Instagram and Twitter. He decided to start playing because he had a bank balance and didn’t know where to invest. With the supervision of the father, the teenager registered with the data of the responsible and decided to “invest” the money he received as an allowance. The young man said that other colleagues of the same age group also take risks on these platforms and even created a group to exchange tips on reliable matches.
Despite A.L. make sure you know how to control how much you spend on gambling, many teenagers who access these platforms without parental supervision can become addicted to gambling. According to neuropsychologist Aline Gomes, minors who access these sites are more affected than adults.
“They are the biggest victims. Once they develop dependence on this type of emotion, both for gains and losses. The sooner they start to be fed by these emotions, the harder it is to take that away from the person” explains Aline.
In addition to gambling addiction, other psychological issues can develop. She explained that the earlier the addiction appears, the more susceptible a person becomes to other types of addiction in later life, such as drugs and pornography.
According to a survey by Portal BNL Data, the most popular betting platforms in Brazil are bet365, sportingbet, betano, betfair and pixbet. On all sites, participation by minors is prohibited and young people may have their accounts banned. Currently, the inspection of these houses is carried out by the Ministry of Economy. Asked by O Dia about how sites are inspected, the ministry said it would not position itself on the issue.
Artificial intelligence (AI) is used to reduce betting risks. Thalles Koester, a Computer Engineering student, explains that technology, like bookmakers, calculates the ODD — the chance a team has of winning the game. When the percentage of the house is similar to the one calculated by the AI, it means that there is a high probability of success. Koester says that the most he invested in matches was R$300. With the use of artificial intelligence, he managed to earn R$500.
Music and English teacher Felipe — who prefers not to have his identity revealed — explains that it is necessary to know well how the platforms work. With the experience of someone who has been betting for four years, the teacher pays all his bills with the money he earns on the sites. Guitar lessons became a hobby. However, he says it took him a while to make a relevant profit. This is because each bettor needs to create their own strategy. According to Felipe, to be successful, it is essential to maintain emotional control and not be shaken by negative experiences.
“Practically all the experiences that someone will go through in this betting environment, which involves variable income and high risk, will be sedimented by their emotional control. It will be linked to how you use your strategy and, consequently, how you manage your money”, he explains.
Interest in gambling usually arises from the pursuit of a challenge. Neuropsychologist Aline Gomes explains that the psychological effects of betting can initially be positive. In an attempt to relieve the stress of routine, many people go back to looking for the emotions they feel at game time. Gradually, what was leisure can become a compulsion.
According to Aline, the main way to identify that someone has entered the addiction-compulsion state is when other areas of life are affected. Often, the need to gamble is so strong that the person stops attending social events and starts spending more than he earns. Among the main symptoms of this type of compulsion are impulsivity, constant lying and denial of dependence.