The plenary session of the Brazilian Senate could vote to legalize sports betting and online casinos on Wednesday (November 29). Before you vote, we’ll bring you everything you need to know about the journey so far.
Before we delve into the complex legal history of sports betting in Brazil, let’s start with the most important step from last week.
Last Tuesday (November 21), the industry eagerly awaited the Brazilian Economic Committee (CAE) to vote on whether to authorize sports betting and igaming through Bill 3,626/2023. It is said that this was postponed by one day at the request of the senators Senado Noticias.
The final approval of the CAE on Wednesday, November 22nd gave rise to the passage of the bill to the full Senate. This meeting will now take place this Wednesday (November 29th). If the plenary vote approves the bill, sports betting and igaming will officially be legal in Brazil.
Importantly, the CAE result confirmed that operators will be subject to a 12% tax rate. This is a significant reduction from the 18% set out in Interim Measure (PM) 1,182 – more on this later.
In terms of distribution, 36% of the tax will go to sports and 28% to tourism. Public safety initiatives receive 14% and 10% each goes to education and social security.
An attempt to remove iGaming, which was included in the bill in September, from the bill was also rejected.
Now we’re all up to date. Let’s take stock of how we got to this point.
How did we get here?
Brazil’s sports betting journey really got going in 2023 – and only around the middle of the year. In May, the Brazilian government announced PM 1,182 for sports betting. President Luiz Inácio Lula da Silva gave the prime minister the all-clear. Da Silva signed it into law in July.
As with most attempts to revive a new law, the Prime Minister was widely criticized. The main points of contention were the above-mentioned 18% tax rate, advertising restrictions and unclear payment transaction regulations.
At the time, Luiz Felipe Maia, founding partner of Brazilian law firm Maia Yoshiyasu Advogados, told iGB that most of the criticism focused on taxes.
“The reactions [to the PM] are 99% negative,” he said. “It’s because of the taxation, because of the restrictions – but above all because of the taxation.”
But Bill 3.626/2023 was just around the corner. The bill was later introduced and made changes to PM 1.182. The biggest change was clearly the addition of an online casino.
However, the controversial tax rate of 18% was retained. We now know that the rate has been changed and reduced to 12%. Bill 3,626 was approved by the Brazilian Chamber of Deputies in September.
Last month, the Brazilian Ministry of Finance published the conditions for operating sports betting in the country. One of the standout measures is that potential operators must operate an office in Brazil to obtain a license.
What does the industry think?
The industry is eager to see every twist and turn in the Brazilian sports betting saga. This latest development is no exception.
Neil Montgomery, founder and managing partner of Brazilian law firm Montgomery & Associados, says he was not surprised to learn of the CAE’s approval “as the federal government is pushing for approval to help achieve a zero budget deficit next year.” to reach”. Montgomery is referring to the Brazilian government’s goal of achieving zero deficit by 2024.
What really surprised Montgomery was the “inclusion of a 20 percent Brazilian ownership requirement for operators applying for a federal license.”
“This represents a significant barrier to entry since the majority of operators seeking to obtain a federal license are foreign and would generally be unwilling to work with local shareholders,” he explained. “We will have to wait and see whether this requirement is dropped or, if it is ultimately approved by Congress, vetoed by the President – there is a possibility that Congress will override the veto after that.”
Hugo Baungartner, vice president of global markets at Aposta Ganha, said reactions to the bill have been “universally positive.” But he admitted the fight is not over yet. “There is still a long way to go, but I am confident.
“We can finally see some progress in regulating the gambling market as we all know that the online sports betting market is a reality.”
Both Montgomery and Baungartner appeared on the iGB podcast “World Series of Politics” and discussed the ins and outs of the path to legal sports betting in Brazil.
iGB is hosting a special webinar in collaboration with IDNow on November 28th. Find out about the latest developments before the vote in the Senate plenary session. Register now to secure your spot.