Brazil to regulate online gaming with new tax measures

Sportsbetting in Brazil will be subject to taxation said Fernando Haddad, Brazil’s Minister of Finance. The new tax levy will be introduced to boost fiscal revenues and offset increased social spending. He explained that the proposed new taxes for iGaming will compensate for the increase in workers’ tax exemption, many of whom may be earning up to twice the minimum wage.? The increase in income tax exemption may cost the government of Brazil up to US $616 million annually.

I will regulate online gambling. They don’t pay any taxes and take a fortune of money from the country.” Fernando Haddad – Brazil’s Minister of Finance

Sportsbetting in Brazil

Sportsbetting offering online fixed odds on sports events have been legal in Brazil since 2018. In 2021 a tax was proposed targeting revenues for the sector to create a new revenue stream for the government estimated to be at least US $385 million. However it appears that this figure will be exceeded when the online gaming sector in Brazil is regulated. The proposed reforms to the online gaming sector may yield the government in excess of up to US $1.2 billion in taxes.

Many sportsbetting companies have increased their activity in Brazil over the last few years.? Amongst the leaders are bet365, Betano and Betfair. Local football clubs have in recent years increased brand exposure through sponsorships from a number of online sportsbetting companies.

Minister Fernando’s intention is to introduce the new reforms this month to regulate the sector. He has flagged his new proposals as being a matter of urgency.

Background

Last month Luiz Inácio Lula da Silva, President of the Republic of Brazil, announced an increase in the income tax exemption range, from the current R$ 1,903.98 (US $ 369) to R$ 2,640 (US $511). This means that up to 13.7 million people in Brazil will be exempt from tax from May this year. The amount makes up 40 percent of the country’s income from taxes.

The first legalised activity was signed off in December 2018 by former President Michel Temer. The new law is waiting for the sign off by current President Lula. The Minister of Finance is making it very clear that he wishes to speed up the process. The new regulated framework is bound to transform sportsbetting in Brazil, both for operators and customers.

LatAm

The LatAm region which is home to 10 percent of the world’s population is considered to be one of the world’s most dynamic markets for sportsbetting. The online sportsbetting sector scaled up exponentially during the pandemic and has started to go through a transformation since then with many users shifting from land-based to online services. This trend is expected to stay and once the sector is regulated, the region will secure stability and reputation by building on trustworthy relationships and affiliations over the coming years.

M&A activity in the sector is expected to continue to grow and local businesses are bound to continue to partner with strong participants in the global arena to offer superior products to customers. Locals are passionate about sports with favourites being football, American baseball and basketball, and on a more diverse level horseracing influenced by neighbouring Argentina. There is a marked customer appeal in mainsteam European football leagues generated by the growing use of the internet.

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