betting) in order to attract their players to the licensed market.
Will high taxes mean that many operators will continue to operate without a licence in Brazil?
Udo Seckelmann Head of Department Gambling & Crypto, Bichara e Motta Advogados
Te Brazilian Institute of Responsible Gaming (IBJR) released a study compiled by economic consulting business Tendências Consultoria. According to the study the proposed tax rate when combined with other taxes and fees could make the market unfeasible for many operators. What do they make of this assessment? Is the tax rate too high?
Yes, the tax rate is too high. Besides the study provided by Tendências Consultoria, there are some other studies around the globe which conclude that an overall tax rate between 15 per cent and 20 per cent on GGR gives a high channeling rate and favorable tax revenues to the government.
However, if we consider all the taxes, costs, and fees the law in force is imposing on the operators, this burden could increase to a rate that considerably surpasses such range. High tax rates lead operators and consumers to move outside the licensed system.
According to the IBJR many operators are re- evaluating potential investments in the country, including in sports and other related projects. Why do they think of this? Is it an accurate assessment of the future market?
It is, indeed. Te current uncertainty regarding the regulation of betting/gambling in Brazil naturally results in operators being more cautious with their investments in the country. As soon as we have a regulatory framework in place, operators will have a clearer view of the future of the market to decide whether a potential investment should be profitable in the long run or not.
What do you think of the bill overall? What impact will it have? Will it be effective in bringing players to the legalised market?
Tere are some sensitive provisions of the Bill of Law that shall be carefully assessed by the Congress. I believe the taxation on the operators, the taxation on the winnings, and the licensing fee shall be altered if Brazil wishes to bring Brazilian players to the licensed market. Tis is the first step.
Tere are several examples of jurisdictions that have committed these same mistakes and achieved a low channelisation rate. We must learn from these examples to avoid them. Apart from these, Brazil should also regulate other gambling verticals (and not only fixed-odds
P38. WIRE / PULSE / INSIGHT / REPORTS
I believe this decision is based on several aspects of the law/regulation, but for sure the taxation has a big impact on this. Te licensing fee, the monitoring fee (“taxa de fiscalização”), the taxation on both operator and winnings, the limitation on the permitted verticals, and whether the regulator will be able to effectively block unlicensed operators are some of the aspects that may lead some operators to not apply for a license in Brazil.
Will Brazilians continue to bet via illegal sites?
Yes. Brazil will not achieve a 100 per cent channelisation rate, so there will be some Brazilian players who will continue to bet via unlicensed websites.
Is the new online gambling bill a lost opportunity due to high tax rates and other restrictions?
Yes, it could be. Brazil has a big chance to have a well-regulated market with a good channelisation, but the current Bill of Law shall be changed to achieve this.
What advertising restrictions will be in place?
According to the current law and the first ordinance (“Portaria”) published by the Ministry of Finance, most of the advertising restrictions follow the principles of Responsible Gambling applied in the best international practices. Te National Advertising Self-Regulating Council (CONAR) is also be permitted to establish further restrictions on betting advertising at a later stage.
How has the sports betting market evolved now that states are allowed to offer online and land- based sports betting?
Tis is a big discussion in Brazil nowadays. Tere are some states that are issuing licenses to operators within the limits of their territory – which are cheaper in comparison to the federal license.
Nonetheless, the Rio de Janeiro lottery (LOTERJ) guaranteed in their bid invitation for the application that LOTERJ licensed operators will be permitted to offer online betting to the whole country – which would eventually conflict with the federal license to be issued by the Ministry of Finance. Tis conflict will most certainly be brought to the local courts in a near future.
Do religious groups in Brazil still play a role in formulating gambling policy in Brazil? How powerful are they today? Is their influence increasing or is it on the wane?
Yes, there are some groups that are against the legalisation/regulation of gambling verticals in Brazil – or, at least, are in favour to impose harsh restrictions/taxation and other burdens. Tey still have some power in the Congress, but I believe it is not increasing.
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