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Brazil Moves Closer to Regulating Online Gambling with Lower House Approval

Brazil, the world's 10th largest economy, has moved closer to fully regulating its online gambling sector. The Chamber of Deputies recently approved Bill 3626/23, which has undergone several amendments since its introduction by Deputy Adolfo Viana. The bill still awaits the Federal Senate's input, which has 45 days to comment.

One of the key provisions in the proposed law is the exclusion of foreign operators from offering regulated gambling services in Brazil. To comply with this, businesses must be incorporated under Brazilian legislation and have their headquarters and administration within the country. It remains to be seen how much of a barrier this would be for foreign operators who might need to collaborate with local businesses to enter the market.

This comes only two months after Brazil regulated sports betting with 18% Tax, marking a significant achievement as sports betting is now officially regulated in the country.

The bill mandates that operators must also satisfy various technical requirements, including minimum share capital and membership in a sports integrity body. Moreover, they must adhere to strict anti-money laundering and counter-terrorist financing policies.

The proposed legislation keeps the 18% tax on revenue, which commentators note rises to around 31-34% when additional contributions are considered. Furthermore, there are specific allocations for the gaming revenue. While previously 10% was proposed for social security, it has now been reduced to 2%. Other assignments include 1.82% for the Ministry of Education, 6.63% for sports, and 5% for tourism.

Operators must pay a license fee of $R30m (£4.89m/€5.69m/$6.10m) to offer gaming through a single betting app. Any additional offering would require another license. The bill also shortens the license term from five to three years.

Another significant aspect of the legislation is its prohibition of bonus bets and credit lines to customers. Additionally, the bill mandates that all advertisements comply with new guidelines, and any violation would necessitate removal upon order from the Ministry of Finance.

The bill also includes stringent payment rules aimed at countering offshore gambling. Only Central Bank-authorized institutions can offer payment services, and a player can only transfer money to a bank account headquartered and administered in Brazil.

This legislative movement marks the latest milestone in Brazil's complex journey to regulate its online gambling industry. After years of failed attempts, including outgoing President Jair Bolsonaro's reluctance to sign off on new rules, the newly elected, industry-friendly President Luiz Inácio Lula da Silva has revived hopes for the sector's formalization.

Now, all eyes are on the Federal Senate as Brazil waits to see if the bill will receive the final approval to bring regulated online gambling to one of the world's most significant economies.