IBIA advises Brazil to rethink tax position & bolster integrity safeguards

The International Betting Integrity Association (IBIA) has published its official response to the Brazilian government’s ‘draft decree’ on developing a regulatory framework for fixed-odds betting services.

Representing the integrity interests of multiple sports betting incumbents, the IBIA raises stakeholder concerns with decree provisions attached to taxation and the Brazilian government’s approach to tackling potential sports manipulations.

“Our response focuses on two main issues: a) the decision of the Brazilian authorities to propose a 1% turnover tax on licensed betting operators; and b) the lack of detailed integrity measures within the Draft Decree,” – the IBIA details in its statement.

The IBIA advises the Brazilian government to modify provisions on tax and integrity measures, as two decree dynamics that will impact the success of its upcoming fixed-odds regulatory framework.

With regards to taxation, the IBIA labels a 1% turnover tax charge as ‘over-burdensome’ on Brazilian betting’s fiscal frameworks, which in-turn will become ‘counterproductive to market maximisation’.

Furthermore, the IBIA challenges the government’s belief that a 1% turnover tax equates to ‘around 5-7% GGR charge’, pointing to broad research which states that a 1% tax charge can equate up to 24% GGR charge on incumbents.

It added: “This would put Brazilian betting taxation towards the higher end of the global scale, along with the negative business constraints that a turnover tax will have on betting operators.”

The IBIA advises the Brazilian government to revert to a flexible GGR model dependent on betting product and the need of the consumer.

With regards to the IBIA’s second issue, the body states its disappointment at the Decree’s lack of ‘specific integrity measures’, protecting Brazilian sports against match-fixing and corruption.

Despite the Brazilian government referencing international cooperation on integrity issues, the IBIA underlines that the Decree has made no formal breakdown of how measures and safeguards will be developed.

Helping Brazilian policymakers, the IBIA points to European jurisdictions such as Gibraltar and the German state of Schleswig-Holstein which have developed effective sports integrity monitoring and alert systems utilising the capacity of betting’s diverse stakeholder range (police, sports bodies, leagues and licensed operators).

“IBIA supports robust sanctions for those found guilty of betting-related corruption,” it concluded. “However, it is only through cooperation and partnership working, both nationally and internationally, that evidence-led investigations and sanctions can have the desired impact.

“The association would therefore welcome establishing a betting integrity cooperation agreement with the Brazilian authorities to exchange information to protect the betting market and related sporting events.”

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