Federal Government publishes legislation with guidance on regulation of sports betting in Brazil
On July 24, 2023, Provisional Measure No. 1.182/2023 ("MP") was published, which amends Law No. 13.756/18 which details the rules that will be applicable to fixed odds bets, known in Brazil as “sports betting” or “bets”, in anticipation of the regulation of the sector, awaited by the market since December 2022.
Law No. 13.756/18 allowed fixed odds betting in Brazil but stipulated a deadline for its regulation by the Ministry of Finance, which has not yet occurred.
The new legislation improved the rules introduced by Law No. 13.756/18, such as the appointment of the Ministry of Finance as the entity responsible for overseeing sports betting in Brazil, proposing criteria for the application of penalties and determining, amongst others, which infractions will be subject to administrative sanctions.
The MP brought more clarity on how the taxation of sports betting will work, establishing that operators will be taxed at 18% on the Gross Gaming Revenue, Prizes received by the players, above the exempted amount of BRL 2,112.00, will be taxed by the Income Tax at 30%.
In order to explore such economic activity, legal entities will require an authorization from the Ministry of Finance and to pay an amount which will be established later through regulation. The exploitation of sports betting without prior authorization from the Ministry of Finance will be considered an administrative infraction, punishable by a fine of up to BRL 2 billion - a rule that will only become effective from the moment in which the conditions for issuing the authorization are established by the Ministry of Finance. In addition to the administrative penalties provided for in the MP, there is a provision for the blocking of websites or the exclusion of apps by the internet application providers, after notice from the Ministry of Finance.
The norm also determined that only entities authorized by the Central Bank may offer payment gateways to allow bettors to pay for the bets. The Central Bank will establish rules for the payment gateways with the scope of preventing payments that have the purpose of placing bets by unauthorized operators.
The MP also contains rules, which will come into force in a date yet to be established, on the advertising and publicity of sports betting, prohibiting the dissemination of campaigns from betting sites not authorized by the Ministry of Finance.
Measures related to compliance must be introduced both by betting companies and by the sporting events that are the subject of bets. Bookmakers should promote informational and preventive actions to raise awareness of bettors and prevent pathological gambling disorder, protecting the mental health of bettors, in addition to establishing security and integrity mechanisms in placing bets, integrating a national or international body of sports’ integrity monitoring, and reporting suspected manipulation events to the regulatory body.
Regarding the points that still need to be regulated, the Ministry of Finance will, within the scope of its activities defined in the Provisional Measure, establish rules on the following matters, among others:
- authorization of betting operators, including the amount to be paid for such authorization;
- actions relating to advertising and marketing applicable to sports betting; and
- security and integrity mechanisms to be adopted by betting operators.
Except for the matters that still need to be regulated, the rules provided for in the Provisional Measure are already in force. However, they must be analyzed by the National Congress within up to 60 days, extendable for another 60 days, so that the MP is converted into Law and does not lose its effectiveness.
The Provisional Measure No. 1.182/2023 is available here, in portuguese.
The Law No. 13.756/18 is available here, in portuguese.
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