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Brazil – Sports betting bill would raise billions for the government

By - 27 February 2023

Fabio Graner, an analyst at Jota Economics based in Brasilia, has argued that sportsbetting regulation now reportedly now under consideration could allow the government to collect close to R$6 billion (aroundUS$1.16 billion) a year in fees and taxes.

The estimate comes after a series of stories in media outlets including in Folha de Sao Paulo and CNN that the administration of Luiz Inácio Lula da Silva is working on a new Provisional Measure (PM) on sports betting.

According to reports the Ministry of Finance has already sent a PM that must be evaluated by the cabinet, and signed by President Lula da Silva once it is finalized. A PM is a type of decree, signed and published by the President, with the power of law that needs to be approved by the Congress within 60 calendar days from publication (it is extendable by another 60 calendar days) to be enacted as law.

The PM on sportsbetting could be published this month. According to JOTA, the idea is that sportsbetting operators which do not register and do not formally establish themselves in Brazil will no longer be able to advertise or sponsor clubs. This would have a huge impact on offshore operators.

According to a report in local media published in January as many as 83.3 per cent of the teams in the top division of football in the state of Rio de Janeiro the 2022 Campeonato Carioca de Fútbol are now sponsored by sports betting sites.  Of the 12 teams disputing the title, 10 have contracts with companies in the sector. The top four clubs namely Flamengo, Fluminense, Vasco and Botafogo, have the support of sports betting platforms. 

With the new PM, the companies would have six months to formalize their situation in the country and, in order to operate, a license payment estimated to stand at between R$25 and R$30 million would  be required. Once regulated operators would pay 10 per cent of income tax on prizes, in addition to the normal tax rates imposed on company profits.

The government’s technical team is expected to finalise the draft of the text and forward it to the parliamentary advisory which can make political adjustments in order to help gain further backing for the bill as it goes through Congress. The government wants to raise taxes via regulation and combat corruption in sports following an investigation into allegations of corruption in Brazil’s Series B football league.

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