SBC News Lula signs Brazil Sports Betting Bill into federal law

Lula signs Brazil Sports Betting Bill into federal law

President Luiz Inácio ‘Lula’ da Silva has signed Bill PL3626/23 into law, which will establish the regulatory framework for Brazil to launch its federal sports betting marketplace.

Authorised by Lula on Saturday, December 30, the president’s endorsement completes the legislative process, steering clear of the 2022 impasse when former President Jair Bolsonaro withheld federal sign-off of sports betting.

The Workers’ Party (PT) government revised Bill PL3626/23, which underwent federal evaluation by Brazil’s Senate Committees starting in September. The evaluation process led to over 100 amendments being authorised by the Committees to secure federal approval for the bill.

Despite the amendments, the Senate faced unresolved disputes regarding the authorization of online casino operations, contested by Senators from the Liberal Party. Consequently, the bill was returned to the Chamber of Deputies for a decisive vote on the remaining amendments, casting uncertainty on its legislative future.

On December 22, in the Chamber of Deputies’ final session, 261 members voted for the bill (120 against), endorsing the legislative framework for online casino games.

As published in a special edition of the government’s ‘Diário Oficial da União‘ on December 30, Lula signed Bill PL3626/23 into law, introducing a new regulatory regime for sports betting, commonly referred to as ‘Bets.’

The federal framework is in line with the PT government’s objective to enhance state revenues, with projections indicating that a regulated sports betting market could generate at least R$ 10 billion for public services.

However, during its federal endorsement, Lula imposed vetoes on ‘certain aspects’ of the bill, most notably concerning the tax exemption for betting prizes up to R$ 2,112 (€450). This move, recommended by the Ministry of Finance, was based on the principle of ‘tax equality,’ deemed essential as Brazil’s sports betting market evolves.

The presidential tax vetoes are now pending further examination by the National Congress, where they can be sustained or overruled.

The Senate’s Economic Affairs Commission (CAE) proposals for fiscal and tax structures have been maintained. Licensed operators in Brazil’s federal market will face a 12% tax, whereas player prizes will be taxed at 15%.

To obtain a federal license valid for five years, businesses must pay BRL 30 million (approximately €5.5 million). This license allows the operation of up to three brands. Eligibility is restricted to firms incorporated under Brazilian law with headquarters in the country, and they must appoint a legal guardian domiciled in Brazil.

Revenue from the Bets regime will be allocated to various sectors: 36% to sports ministries and committees, 28% to tourism, 13.6% to public safety, and 10% each to education and social security. Health will receive 1%, civil society entities 0.5%, the Police Federal Equipment and Operation Fund 0.5%, and the Brazilian Agency for Industrial Development 0.4%.

2024’s agenda will see the Ministry of Finance publishing regulations to initiate Brazil’s federal sports betting market. Outstanding responsibilities will include establishing a ‘dedicated market supervisor’ to oversee standards, conduct, and consumer protection in Brazil’s new gambling sector.

Prior to Lula’s authorisation, the Ministry reported that 134 businesses had expressed interest in joining Brazil’s impending online gambling market by submitting their pre-market ordinance measures.

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