The government of Brazil confirmed in an official hearing April 12 what had been an open secret for weeks: that sports betting will be taxed at 15 percent on gross gaming revenues, Good Morning Britain has reported. Attendees at the hearing included stakeholders, trade bodies, operators and sports clubs.
Net proceeds will also be taxed at 0.82 percent to benefit schools and 2.55 percent to go to the National Public Safety Fund.
The media had also previously reported on club sponsorships, taxation of bettors and deadlines to complete the regulations—known as the Provisional Measure (MP) and release them. Bettors’ winnings will be taxed at 30 percent of the income tax.
José Francisco Manssur, a special advisor to the Ministry of Finance, also confirmed that companies that want to operate in Brazil will have to pay a license fee of BRL30 million ($6.08 million), be headquartered in the country and invest a minimum amount of capital.
The MP will be published when Finance Minister Fernando Haddad returns from China.
Manssur declared, “The operator that is not accredited in Brazil as of the deadline conferred by the MP will be, by offering bets to the final consumer, practicing an illegal activity.” He added that such companies will be banned from advertising.
The 15 percent and other fees and taxes are similar to what is in force in the U.K, which Manssur called “the ideal tax model.” He asserted that this model “drove practically all operators to the legal market.”
Manssur added, “with the approval, the MP will empower the Ministry of Finance to issue specific ordinances, including one on the tax rate. Operators have always been open to contribute and have even contributed with practices adopted for responsible gaming and mechanisms to combat the manipulation of results since bookmakers are also victims of this practice.”
Operators who are not accredited will not be able to sponsor teams or advertise.
Although sports betting is being legalized, online case games are not, said Manssur.
Saying that the goal is “fights against illegal gambling” National Association of Games and Lotteries (ANJL) CEO Wesley Cardia said the association supports the new regulations to wipe out black market gambling. He added, “In addition, we are committed to responsible gambling, and we fight against the manipulation of results.”
Brazilian Institute of Responsible Gaming President André Gelfi, who also spoke at the hearing, said that a regulated market is necessary “to offer security to the bettor and the certainty that he/she is in a reliable site regulated by the Government.”
Ricardo Santos, a representative of sports bettors, said he spoke for more than 10 millions of them, “who are upset with the way the regulation has been carried out. All the money in the sector is in our hands, as it is the bettors who put money into the sector. If they are taxed on the stake won, it will be a shot in the foot, and it will go offshore.” He added that it is unfair to tax the amount won, not the profits.
There has been speculation that the MP would also address relaunching LOTEX, the scratcher instant lottery that the government tried to privatize several years ago.
Once the MP is published the Brazilian Congress will have 120 days to adopt it into law.
