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President Lula of Brazil Signs Sports Betting & iGaming Bill into Law
By Jeff Osienya Jan 02, 2024 LegalityBrazil has formally okayed sports betting and iGaming following the signing of a long-awaited bill into law by President Lula da Silva. Join us as we dig deeper into what the newly rubberstamped bill is all about.It’s all systems go for sports betting and online wagering in South America’s biggest economy, Brazil. President Luiz Inácio Lula da Silva signed off on Law 14.790/23, which now sees Brazil officially join the club of countries that have legalized retail and online sports wagering. The confirmation of this momentous occurrence was published in an extra edition of the Official Gazette on December 30th. This is a welcomed move, especially given the 2022 impasse when then-Brazilian President Jair Bolsonaro withheld a bill that would have signed off on sports betting within the country.
The latest development comes after a lengthy legislative process in both houses of Brazil’s legislature that saw plenty of amendments introduced to what was the original bill. Reports, however, indicate that before signing the bill into law, the President vetoed a proposed income tax exemption for customer earnings under R$2,112 (~$425). As such, personal net earnings will be taxed at 15%. The Brazilian government justified the veto by saying that left as it was, that clause could’ve jeopardized tax quality in the country. Part of the statement given by the Executive on this matter read:
Quote“It would result in income tax being charged differently from that charged on other lottery modalities, thus making a distinction on tax behavior.”
Other measures vetoed in the bill related to proposals about commercial promotions and the filing of complaints and investigations. Additionally, a clause about pumping up the accountability for distributing prizes and sweepstakes to R$10,000 was squashed. These vetoes will now be put to the National Congress, the joint session of the Senate and Deputies of Chambers. The National Congress can either ratify the President’s vetoes or overrule these vetoes.
All said and done, lawmakers consider the betting bill a critical tool for the government to attain its goal of wiping out its fiscal deficit this year.
The Legislative Process of Approval
While sports betting was legalized in Brazil in 2018, it was never regulated, meaning a formal market debut was still not possible. As such, an extensive legislative process was needed to establish the frameworks under which sports betting would operate. The bill first went through the Brazilian Senate, where it was approved, but not before some contentious decisions were made. The main bone of contention was the inclusion of iGaming in the bill.
The Brazilian Chamber of Deputies, however, retained the authority to overturn that decision, a choice that wouldn’t stand well in the eyes of the Evangelical faction of the Brazilian Chamber of Deputies. Opposition to parts of the bill was led by Deputy Eli Borges of the Evangelical Parliamentary Front, who expressed his stern disagreement with significant parts of the bill, saying:
Quote“We are taking another step forward to involve young citizens and Brazilian citizens in an unprecedented game.”
The other faction involved in this debate wasn’t relenting either. This side was led by Speaker Arthur Lira, who opined that since gambling was already a widespread activity, it only made sense to regulate it. He pointed out that regulation would ensure more control in the industry and that ill activities such as money laundering and exploitation would be snuffed out. According to Speaker Lira, delaying the regulation of sports betting and iGaming would only strengthen a thriving underground scene in the South American powerhouse.
Following the legislative tug-of-war, Brazil’s landmark decision has drawn applause from key gambling industry stakeholders worldwide. The International Betting Integrity Association (IBIA), through its CEO Khalid Ali, said that Brazil’s new law is a major step in the right direction towards match-fixing. Ali’s statement read in part:
Quote“This is a historic moment for sports betting in Brazil and is a major step forward in the fight against match-fixing. IBIA welcomes the adoption of specific betting provisions in the law, which the association has been campaigning for since discussions on regulating sports betting began in 2018.”
In his statement, CEO Ali added that:
Quote“A number of Brazilian market-focused operators have already joined IBIA, and we look forward to engaging with other operators’ intent on offering well-protected sports betting products to Brazilian consumers via IBIA’s world-leading integrity network.”
Key Elements of Brazil’s Sports Betting and iGaming Law
In its final form, the sports and iGaming bill retains vital recommendations by the Senate’s Economic Affairs Commission for fiscal and tax measures. Some recommendations include a clause that all licensed operators who want to set up shop within Brazilian territory will face a 12% tax while the players will face a 15% tax.
Additionally, to get licenses to pry their trade in the Brazilian sports wagering and iGaming sector, businesses will also be required to pay R$30 million (~$6 million). The license will allow these businesses to operate up to 3 sports betting and iGaming brands. Eligibility of licensed sports betting companies will be restricted to firms incorporated under Brazilian law and those with headquarters in the country. The boards of these betting firms will also have to include a Brazilian national citizen holding a share capital of at least 20%.
Moreover, these firms must have a legal guardian residing in Brazil. Operators will further have to demonstrate a good understanding of handling wagers, amongst other requirements that the Brazilian industry regulators will outline. They must also install measures to ensure their customers’ activities do not lead them to potential losses. The law additionally lays out potential punishments for breaching various federal regulations in Brazil. For instance, there is a clause that authorizes the suspension of payments of wagers suspected of results manipulation.
Revenue derived from sports betting and iGaming will be allocated to various sectors in the Brazilian economy: 36% will go toward Sports ministries and committees, 28% to the tourism industry, and 13.6% to public safety, with Education and social security receiving 10% each. Moving on to the sub-1 % category, civil society entities will receive 0.5%, the Police Federal Equipment and Operation Fund will receive 0.5%, and the Brazilian Agency For Industrial Development will receive 0.4%.
Meanwhile, persons under 18 years old will not be allowed to place wagers. The law also prohibits the participation of owners and employees of gambling companies, as well as public agents linked to the regulation and overall control of the Brazilian wagering market. Likewise, individuals with access to a computerized betting system or those who may influence the outcome of games, such as sports leaders and athletes, are barred from gambling in Brazil.
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