Brazil’s Federal Data Processing Service has been tasked by the government to create a system to prevent sports betting manipulation, O Globo reported January 12.
The system, which would apply to all online wagers by companies that legally operate in the country, would monitor all bets in real-time. It would also ferret out tax fraud, track gamblers’ profiles, monitor how much time players spend gambling online and alert those players to possible additive behavior.
The purpose, said José Manssur, special advisor to the Treasury, is “to monitor tax collection, but also possible fraud, negative externalities or even manipulation of results.”
The Ministry wants to set an early February deadline for online platforms to apply for authorization to operate in the country. There would be an application window twice annually for several weeks. Companies that miss the window or are denied would be considered illegal.
More than 130 companies have expressed an interest in operating in Brazil, more than the Ministry had anticipated. It is estimated that nearly 300 websites operate in Brazil, although the companies operating them are probably far less than that. Some 44 have been identified that operate in tax havens and 64 are based in Brazil.
To be allowed to operate, the company would be required to hire a government-approved laboratory to gauge its suitability and issue it a certificate of compliance. It would also be required to pay a fee of BRL 30 million ($6,138,780).
Manssur added, “We want to combine data from all companies, per user. If José da Silva, for example, spends more than 10 hours gambling, we can catch a case of possible pathology and indebtedness.”
The Ministry will give a hard look at unusual sports bets that might indicate manipulation. This would lead to alerting the sports team or entity responsible for tracking a player’s behavior.
Several months ago the executive secretary of the Ministry of Sports, Juliana Agatte, testified to the Senate that the government seeks to create the National Agency for the Protection and Promotion of Sports Integrity to both fight manipulation of sports results and money laundering across the entire sports spectrum.
The first of the proposed ordinances, would validate auditing labors, and the next would regulate gambling advertising on various media.
Manssur told O Globo, “We are seriously analyzing advertising. In the ordinance, we are going to talk about the responsibility of the company that makes the advertisement and the vehicle that displays it. We are not going to allow camouflaged advertising or messages from people who have become rich overnight.”
The government also plans to monitor digital influencers who might promote illegal games or promulgate false information. Manssur added, “The virtual environment that children and adolescents frequent today has no fixed schedule, we no longer have children’s programs on TV. We have to make sure that the message is not aimed at children.”
The government will not regulate local games that don’t include fixed odds betting. These games include “avioncito” which does not have predetermined prizes, a game based on the height of a plane’s flight.
The taxation of sports betting winnings, at 15 percent, will be lower than the tax on tobacco and alcohol, according to Folha de S. Paulo. The tax on those products is 80 percent, the paper reported.
Those taxes are based on industrialized products (IPI.) According to Fabio Lunardini, a tax expert at Peixoto & Cury Advogados interviewed by Folha de S. Paulo, “The approach is different. While the government uses, or tries to use, the IPI as an inhibitor of the consumption of certain products, the idea of taxing gambling, both for them [companies] and for the players, is to take advantage of the growth of this market.”
Victor Schmidt, a tax expert with Costa Tavares Paes Advogados, told Folha de S. Paulo, “A first prejudice was to equate it to the lottery, but throughout the debates, there was a parliamentary consensus to approve this reduction. It is a point that perhaps some sectors of society may question because half the rate that applies to other lottery prizes is applied here.”
The outlet reported January 22 that between January and November of last year that Brazilians spent $11.1 billion on online and land-based gambling. This compares to $9.5 billion for the country’s beef exports.
This amount is expected to be even higher since betting platforms operated most of last year without regulation.
The new legislation proposes a 12 percent tax rate for gross gaming revenues and 15 percent for bettors’ winnings.
