A draft proposal co-signed by Brazil President Lula da Silva and Finance Minister Fernando Haddad has recommended that a 15% gross gaming revenue (GGR) tax be applied to sports betting activities.
News of the proposal submitted to the Attorney General’s National Treasury Office (PGFN) was reported during the Easter break by Brazilian business news source Poder360.
As reported, Lula and Haddad wish to implement a tax framework “based on a UK model” which specifies GGR as “gross income minus prizes paid to customers.”
The desired UK model is preferred as the Treasury believes it will help a regulated sports betting market achieve a “90% target rate for licensed businesses“.
The tax proposal has further recommended that the government apply a BRL 30m (€5.5m) fee for individual sports betting licences, each valid for five years.
The PGFN will conduct a constitutional review of key proposals desired by the Ministry of Finance, collecting opinions from representative entities and other ministries from 10-to-16 April.
It disclosed that a private hearing will be held for the ‘Big 4‘ football clubs of Rio (Flamengo, Fluminense, Botafogo and Vasco de Gama) and Sao Paulo (Corinthians, Palmeiras, São Paulo and Santos) on 11 April.
Meanwhile, CBF the governing body of Brazilian football, will outline its tax demands on 14 April. Prior to the Easter break, the CBF declared a demand of “a guarantee 4% share of gross revenues to be distributed across football leagues”.
The demand sees the CBF more than double its former guaranteed fee of 1.63% pledged under the previous sports betting Law 13,756/18, approved in 2018.
Serie A clubs require clarity on how the government will implement the hefty BRL 30m licence fee, recommending that payments be made in instalments to not discourage bookmakers from sponsoring football clubs.
Retaining bookmaker sponsorship fees are critical, as except Cuiabá, all Serie A teams in the Brazilian Championship have existing agreements with bookmakers.
Yet conflicts appear on the horizon, as Serie A clubs are opposed to the CBF’s demand that it serves as the “centralised collector and distributor of betting fees for Brazilian football.”
The government has vowed to work with Serie A clubs and the CBF to find a resolution on betting fee conflicts.
Further developments saw the draft proposal recommend a new tax framework for Brazil’s Instant Games monopoly tender, which has not secured an operating steward since 2019.
A consortium formed by IGT and Scientific Games won the ‘Jogos Raspa‘ concession in 2020, but refused to take on the monopoly contract due to unspecified tax terms and technical commitments.
Backing reforms, Finance Minister Haddad believes that a new tax regime for sports betting and instant games could net Brazil’s government approximately BRL 12bn per year (€2.1bn) in taxes – vital to balancing President Lula’s economic programme.
Should the tax proposal secure its PGFN sign-off and approval by stakeholders, “Brazil should obtain a new sports betting decree within the next two weeks,” – as Brazil government maintains its agenda to legalise sports betting in 2023.