In anticipation of a significant vote in Brazil, the nation’s Senate has outlined that sports betting and online gambling may be subject to new considerations under “selective taxes.”
This development is crucial to Brazil’s legislative processes regarding betting, as detailed in a report by Senator Eduardo Braga (MDB-AM), who is the Rapporteur for the Senate’s federal tax reform initiative.
According to SBC Notícias Brazil, Braga’s report categorizes sports betting, online gaming, and fantasy sports as “goods and services that are harmful to health or create negative externalities, akin to alcohol, tobacco, and fossil fuels.”
This classification is expected to influence the taxation approach for the sector, an area consistently under examination.
Enacted in December 2023, the tax structure under Law No. 14,790/2023 imposes a 12% general income tax rate on the gross gaming revenues (GGR) of licensed operators. Consumers face a 15% personal income tax on prizes and winnings that surpass BRL 2,824 (approximately €530), as endorsed by President Lula da Silva.
While this framework is approved, it is still under review. A “Constitutional Amendment Proposal (PEC)” has been suggested to decide if selective taxes should specifically target betting activities.
Tamas Kadar, CEO and Co-Founder of SEON, expressed that Brazil is on the brink of a “transformative moment.”
He mentioned to CasinoBeats: “The plan to launch a domestic regulatory gambling license, replacing foreign systems, could have extensive impacts across the market and might initiate a ‘gold rush,’ with businesses vying for a foothold in this newly regulated environment.”
“The fresh framework seeks to promote transparency and stimulate economic progress. As this shift unfolds, new compliance demands, including high licensing fees and taxes, intend to bring considerable revenue to Brazil, potentially boosting the economy by $3 billion. Consequently, Brazil is now positioned to become a leading force in the global gambling industry.”
“Nevertheless, this transition will present challenges. Operators need to navigate a convoluted regulatory space, maintaining compliance with strict licensing requirements while adapting to local enforcement protocols. This scenario stresses the critical need for effective fraud prevention measures, which must be in place before the January deadline.”
Moreover, this marks a historical period not only for Brazil but for the entire Latin American region, as it experiences the effects of Brazil’s market expansion.
Kadar noted that if handled well, Brazil’s approach might “set a precedent for other Latin American countries,” underscoring the crucial role a well-regulated market plays in attracting investments and upholding integrity.
