Brazil: Senate committee approves sports betting bill with amended 12% tax rate

2023-11-24

Brazil

Reading time 2:18 min

Brazil’s Senate’s Committee on Economic Affairs (CAE) approved on Wednesday the project that regulates and taxes the sports betting and online casino market. The approved bill lays out regulations governing the operations of betting houses in the country. It proposes a 12% tax on companies operating in the sector and a 15% tax on the winnings accrued by bettors, a rate slightly lower than what the Ministry of Finance had initially suggested.

The committee also approved a request that calls for an urgent vote on the proposal, already approved by the Chamber of Deputies, in the main plenary of the Senate. The President of the Senate, Rodrigo Pacheco (PSD-MG), hinted that the project could now be included on the agenda for the next session.

Senator Angelo Coronel, the bill’s rapporteur, expressed optimism about a plenary vote happening next week rather than the current week.


Senator Angelo Coronel

The proposed rules must apply to so-called fixed-odd bets on real sporting events and online gaming events such as casinos. The Ministry of Finance sees this initiative as a key revenue stream for the coming year, aligning with its broader goal of achieving a fiscal deficit of zero by 2024 without increasing public debt.

The CAE also approved the Ministry of Finance’s proposal to charge BRL 30 million (€5.5 million) for five-year licenses, each valid for up to three trademarks. Operators must have a domiciled business in Brazil, in which a Brazilian partner must hold 20% of the share capital. They must also pay regional income taxes.

Tax will be distributed as follows: 10% to the Ministry of Education; 14% to public security, including the National Public Security Fund and Sisfron, 36% to Brazil’s Ministry of Sports (to share among sports organizations, national bodies, and charities), 28% to tourism (Embratur and the Ministry of Tourism), 1% to the Ministry of Health, 0.5% to civil society agencies (Fenapes and Fena Pestalozzi) and 0.5% to the Federal Police operational fund. Oversight of taxation will be the responsibility of the Ministry of Finance.

For the taxation of player prizes, operators will need to register customer winnings through Brazil’s Personal Income Tax (IRPF) registry. Taxes will be charged on a yearly basis with winnings of less than BRL 2,112 (€400) exempt. Players will have 90 days to claim prizes, and unclaimed winnings will go to education and disaster relief funds.

Restrictions on participation extend to individuals under 18, betting brands' personnel, public officials, and those diagnosed with gambling addiction. Facial recognition technology will be mandated for player identification. Oversight will fall under the Ministry of Finance, with penalties ranging from warnings to fines based on revenue percentages. The legislation emphasizes security measures, auditable systems, and actions against money laundering and terrorism financing.

Meanwhile, football clubs have signed a petition opposing a proposed amendment to Brazil’s sports betting bill PL 3626/2023. Amendment 38-U, put forward by Senator Eduardo Girão and supported by the Senate Sports Committee, would prohibit sports betting sponsorships for teams, individuals, and championships.

Some 34 professional football clubs, including teams in the Brazilian Football League (Libra) and the Liga Forte União (LFU), have signed a petition calling for the Senate to reject the proposal, which would also ban former athletes, referees, technical staff and federations from entering into sponsorship deals and would limit broadcast and social media advertising to between midnight and 6 am. Advertisements in sports arenas would also be banned.