The newly formed Brazil Institute for Responsible Gaming (IBJR) has warned the government that its proposed measures to regulate sports betting carry ‘unnecessary market risks’.
The new trade body – which formed this May and carries the membership of bet365, Flutter, Entain, Betsson Group, Betway Group, Yolo Group, NetBet Group, KTO Group, and Rei do Pitaco – has written to lawmakers highlighting commercial concerns related to legislative proposals.
The body has showcased concerns on “high license prices, strict tax regime, and restrictive market conditions, which will dissuade international business from investing in the Brazilian new sports betting market.”
“The IBJR is deeply concerned about the new delays and the uncertain trajectory of the sports betting market in Brazil,” stated the Institute.
Monitoring regulatory developments, members are frustrated by the resummoned debate on whether to convert “the provisional measure to a Law Project” which could cause further delays, increasing uncertainty on the timeline for Brazil to launch its sports betting regime.
Another critical point raised by the Institute was the “rigorous” tax regime, described as one of the highest globally, coupled with the steep licensing cost, set at 30 million reais ($5.9m).
The Institute fears that these factors will lead to less attractive offerings for players compared to black market offerings, potentially resulting in reduced government income and increased threats to sports integrity, with minimal player protection.
“High taxes will result in less attractive value propositions for players, compared to those offered by the parallel market,” the IBJR clarified. However, it also expressed skepticism over the government’s ability to eliminate unfair competition, criticising the authorities’ “ambitious” and “unknown” ideas.
Supporting the development of a “fair and sustainable marketplace”, the IBJR has proposed its ideal framework for one of the most anticipated betting markets globally.
“As the regulatory process enters its final stages, we are still not convinced that decision makers understand that legitimate investors will not seek licenses in Brazil without the guarantees of sustainable and fair regulation, which allows for fair competition among operators,” the IBJR stated in its letter to lawmakers and regulators.
The IBJR’s proposed adjustments include maintaining the taxes outlined in Law 13,756 whilst lowering corporate income tax. In addition, it has recommended to expand product offerings and offer competitive betting, thus rivaling international markets.
Reflecting on recent events, the IBJR criticised the sudden change in the government’s plan regarding a provisional measure now being considered as a law. “This creates further delays and results in uncertainty for the IBJR and sports betting operators,” it warned.
The organisation underlined two issues that could negatively impact the sports betting market. First, alongside the expected 28% tax rate, the proposed high licence fee will push consumers towards illegal gambling operators, which don’t pay taxes but offer a diverse range of appealing products.
IBJR is resolute in advocating for a sustainable and fair market, urging the Brazilian authorities to consider their recommendations for the benefit of the industry and needed to strike a balance between regulating the gaming industry effectively and creating an environment that attracts legitimate investment.