Brazilian Government Proposes Regulation and Taxation of Sports Betting
The Brazilian Minister of Finance, Fernando Haddad, announced last Thursday that the government plans to propose a bill to Congress for the regulation and taxation of sports betting. The new source of revenue is expected to yield approximately 2 billion reais next year, according to Haddad. Previous estimates by the ministry suggested potential revenues of up to 12 billion reais annually with this measure.
Promising growth
However, this move could impact the government’s goal of zeroing the deficit by 2024 as it faces criticism over the country’s high-interest rates. Haddad expressed concern, stating that the government pays a 10% real interest rate, which is unsustainable for the nation.
The gambling sector in Brazil has already shown promising growth, with resources related to the industry reaching 8 billion dollars (about 40 billion reais) this year, as the Central Bank (BC) reported.
Under the proposed taxation rules, bookmakers can only operate in the country if authorized by the Federal Government. To obtain authorization, they will be required to pay a grant of R$ 30 million, have their headquarters within the national territory, and maintain a minimum capital of R$ 100 thousand.
The taxation of companies operating sports betting will be based on 16% of the gross gaming revenue (GGR), which refers to the income obtained from the games minus the prizes paid to players. Additionally, bettors will be subject to a 30% income tax rate on their winnings, with exemptions for amounts up to R$ 2,112.
Distribution of tax collection
The tax collection generated from operators will be distributed as follows:
- 2.55% to the National Public Security Fund
- 0.82% to elementary schools
- 1.63% to clubs, in return for name assignment
- 10% to social security
- 1% to the Ministry of Sports
To oversee the sector and combat match-fixing, the Federal Government intends to create a secretariat for games and lotteries, which will monitor and inspect the industry.
The proposal marks a significant step towards the regulation of sports betting in Brazil, potentially providing a new revenue stream for the government while also ensuring transparency and fair practices in the gambling sector.
