Brazil's President, Luiz Inacio Lula da Silva, has officially sanctioned Bill 3,626/2023, instituting a regulatory framework for sports betting and igaming in the country. Signed into law on December 30, this move marks a significant step in regulating and formalizing the online gambling sector in Brazil.
The passage of this bill culminates a legislative journey that saw the Chamber of Deputies vote in favor of the legislation on December 21. This decision reinstated gaming into the bill after its initial removal by the Senate. This pivotal moment was followed by President Lula's decisive action to approve the bill, laying the groundwork for Brazil's regulated sports betting and igaming market.
Taxation and Financial Implications:
Contrary to initial proposals, President Lula vetoed the income tax exemption for customer earnings below R$2,112. Instead, personal net winnings will be subject to a 15% tax. A 12% tax on gross gaming revenue has been set on the operator side, with a significant portion designated for sports development. These taxation measures follow recommendations from the Economic Affairs Commission.
Licensing and Operational Requirements:
Under the new law, fixed-odds betting will be permitted, with the Ministry of Finance playing a regulatory role. Operators can obtain five-year licenses covering up to three brands for a fee of R$30m. Notably, the number of brands permissible under a single license is two fewer than previously anticipated.
Consumer Protection and Compliance:
The legislation mandates robust consumer protection measures. Operators must offer self-exclusion options, ranging from 24 hours to six weeks. Additionally, they must appoint a Brazilian board member holding at least 20% of the company's share capital. A crucial compliance aspect is the verification of bettors' identities, mandated to be over 18 years old, using facial recognition technology.
Regulatory Roadmap and Operator Interest:
The next phase involves the Ministry of Finance publishing regulatory guidelines for operators. Over 130 businesses have expressed interest in applying for licenses, indicating significant industry interest in the Brazilian market.
Inclusion of iGaming: A Strategic Decision:
iGaming's incorporation into the bill, despite its initial removal by the Senate, was driven by financial considerations. According to Neil Montgomery, founder of Montgomery & Associados, the predominant revenues from igaming for operators and the government's tax objectives made its inclusion a logical step. Hugo Baungartner, Vice-President at Aposta Ganha, also acknowledged the critical role of igaming for Brazil's 2024 budget, despite opposition from evangelical groups.
Presidential Approval Following Legislative Journey:
With the approval of Bill 3,626/2023, Brazil embarks on a new era in online gambling. The legislation establishes a regulated environment and anticipates substantial economic benefits. As Brazil prepares to roll out its regulated sports betting and igaming market, the industry looks forward to a transformative period of growth and development.
Blackjack
Slots
Roulette
Baccarat
Craps
Poker
