New Report: Brazilian Regulation Under Consideration Appears UnwelcomingPublished August 15, 2016 by Lee R
Competition is limited, and fees are relatively high.
From a global perspective, some might say the Brazilian government´s new regulation suggestions tend towards the Draconian.
Not so Free
Though the special committee headed by Senator Fernando Bezerra Coelho calls the new SB 186/2014 legislation a “liberalization” of the country’s land-based and online gambling markets, early information indicates that those measures are going in the opposite direction.
A report released by Coelho reveals new restrictive requirements the government is considering. The report contains recommendations for the implementation of brick-and-mortar casinos; bingo; sports betting; online gambling; federal and state lotteries; sweepstakes and the ‘jogo de bicho’ numbers game; without making any mention of slot machines nor video lottery terminals.
The report further specifically limits gambling concessions to subsidiaries of the Caixa Federal Bank, the current owner and operator of the Lotex instant lottery scratch card business–or awarded to the highest auction bidder. Though the fees are expressly earmarked to fund Social Security, this system appears the antithesis of a free market, favoring richer international operators over domestic firms.
Another stiff requirement in the report would be variable monthly “inspection fees” to be paid out by operators according to the value of monthly winning bettor awards.
Monthly awards totaling BRL 50m (US $15.9m) or less would incur a fee of BRL 259k ($82.5k), or roughly 0.5%. For monthly awards exceeding BRL 400m ($127.5m), the fee tops out at $1.3m (1%).
Large Player Tax
A further requirement that raises eyebrows is the subjection of players’ gambling winnings to a 30% withholding tax, which instead of increasing government revenues may just as likely steer Brazilian punters towards unlicensed sites.
Unlicensed operators who provide services to Brazilian players will be liable for fines and prison terms of one to five years.
Considering the harshness of the licensing regulations and the possibility of offering services to Brazilian operators from remote locations, the penalty does not seem like sufficient deterrent. For Brazil to harness the benefits of the online gambling revenue tax, a more user-friendly system of regulation may be advisable before sending it in for a Parliamentary vote.