Brazil Deputies settle on Betting Bill carrying Social Democrat amendments

Brazil Deputies settle on Betting Bill carrying Social Democrat amendments

The Chamber of Deputies of Brazil has approved the passage of Bill-3,626/2023 to establish the legislative foundations for a federal fixed odds sports betting marketplace.

SBC News Brazil Deputies settle on Betting Bill carrying Social Democrat amendments
Lula Da Silva, President of Brazil

As voted on Wednesday 13 September, the Chamber of Deputies has settled on the policies of Bill-3,626/2023 following a 120-day review. The text will be forwarded to the Senate which will be tasked to federally sanction “the project to regulate sports betting in Brazil”.  

Prior to the vote,  the Lower House had approved the ‘opinion of plenary amendments to Bill 3,626’, submitted by policy ‘rapporteur’ Adolfo Viana – a Deputy of the Brazilian Social Democratic Party (PSDB). 

His submission included several amendments to ‘Provisional Measure 1182’ endorsed by President Lula Da Silva and the governing Workers Party (PT), who in July submitted to Congress its favoured legislative policies to launch a regulated sports betting marketplace.

The amendments set out a new scope for legal betting on sports in Brazil, including wagering on esports events (outlined as ‘virtual sports’’). Other elements addressed in the framework include taxation, advertising and marketing standards, integrity and player protection.

The document cited ‘Online Games Events’, yet provides no breakdown on specific verticals such as whether casino table games (roulette, blackjack etc) and slots will be permitted under the legislation, which seems to focus predominantly on fixed odds betting.

More clarity has been provided on the parameters of taxation and licensing, with no limit placed on the number of operators able to conduct business in Brazil, as the government and Congress apparently seek to create a highly competitive market.

Licences will be issued by the Ministry of Finance for a period of up to three years at a charge of R$30m (€5.7m). Both independent domestic and international firms as well as state-lottery operators will be able to apply for betting permits.

The document added that licences will cover “the limit of up to one electronic channel per act of authorisation”, meaning operators will likely need to pay and receive permits for different brands and verticals. 

Licence requirements for operators include having customer support services in place, including via telephone and webchat; membership of a national or international integrity body; and meeting tight rules around ‘advertising and propaganda’.

Operator marketing would be subject to restrictions around times, programmes, channels and events with the goal of reducing exposure to customers under-18 years old.

Under the preliminary proposals, advertising cannot include ‘unfounded statements about the probabilities of winning’ in advertisements, present bets as ‘socially attractive’ via the use of endorsements by celebrities to suggest betting contributes to success, suggest that betting can be an alternative to employment, or offend Brazilian culture, traditions and customs.

On taxation, Viana had proposed that the 18% tax rate endorsed by the government be reduced to 12%, although it appears this proposal did not make it into the final draft heading to the Senate as reported by local media. 

The Senate will review the ‘tax allocation’ proposal agreed by Deputies to distribute 2.55% to the National Public Fund, 2% to Social Security, 1% of funds to Brazil’s Tourism Agency and 0.5% to the Sports Secretariat.

As stands, Brazilian sports clubs will receive just 1.13% of tax % income, a figure likely to be contested by football clubs which had demanded the government guarantee a minimum of 4% of taxes for the use of athletes and club image rights.

Betting integrity’ features in the document outline recommendations to “avoid manipulation of sports results and corruption”. It is recommended that “people of influence” (sports directors, coaches, players, management) should be prevented from wagering. Further protections cite that all licensed operators need “mechanisms to ensure betting integrity and prevent manipulations”.

As with other up-and-coming markets, Brazilian policymakers have sought to curb the use of bonuses prior to launch. Viana’s view is that bonuses or any other ‘prior advantage’ should not be offered even if as a promotion or advertisement.

Stricter regulations are required on Payment Service Providers (PSPs) that must be accredited as an “authorised institution” of the Central Bank of Brazil (BCB) to process payments/withdrawals for betting customers.  

Licensed operators will only be able to process payments from financial institutions with “headquarters and administration in Brazil and authorised to operate by BCB” – requirements needed to protect against the black market. 

Operators which violate these parameters could be subject to a range of disciplinary fines under policymakers’ proposals. Fines for corporations will be set at between 0.1% to 20% of an operator’s revenue, depending on the scale of the licensing breach, although charges would be capped at a maximum of R$20m (€3.8m).

Brazilian authorities will further hold the right to fine individuals of infringing businesses with penalties of up to R$2bn (€380m) and can suspend online activities for a period of up to 180 days.

From the outset, it appears that the launch of Brazil’s sports betting market is on the horizon as the Betting Regulation Bill passes onto the country’s Senate for the next round of approvals.

As previously cited by Finance Minister Fernando Haddad, the government targets raising approximately BRL 12bn per year (€2.1bn) in taxes – vital to providing new funds for President Lula’s economic recovery programme

Widely anticipated as one of the biggest – if not the biggest – ‘emerging market opportunity’ in global gaming, Brazil has caught the attention of some of the industry’s heaviest hitters including Entain and Flutter, but domestic firms including state lottery operators are also readying themselves to seize an early advantage.

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