After over 70 years of gambling prohibition, Brazil is regulating the market. Indeed, it is a step in the right direction for operators and gamblers alike. Notably, the bill also legalizes online casino providers apart from sportsbook operators.
This means players can enjoy new casinos and new bonuses amongst a variety of other promotions attached to other casino game categories, which is always good news.
Last September, the Chamber of Deputies in Brazil, the world’s 10th largest economy, announced that the gambling bill, set to regulate sports books and online casinos, has been approved.
This marks one of the last hurdles along this long journey that will officially regulate gambling nationwide. The new Bill will replace the current provisional measure by Brazil’s President, Luiz Inacio Lula da Silva, last July.
The main aim of this Bill is to bolster Brazil’s struggling budget with around 700 million Reals (approx. $136 million) in licensing fees and 18% tax revenues, according to Dario Duriga, Brazil’s Finance Minister – but is all that glitters gold?
Why is This a Big Deal?
In Brazil, all forms of gambling have been made illegal since 1964, when all casinos, bingo halls, and betting shops were forced to shut down at the request of Enrico Gaspar Dutra, the President at the time.
With that in mind, a series of events have set change in motion in Brazil over the last five years, with fixed-odds gambling taking the lead in legalization in 2018. This system was designed to allow players to wager on the outcome of sports matches while being advised precisely how much they stand to win whenever placing a bet.
However, due to the change of government in 2019, the necessary regulations required to implement the law were never issued, so nothing came of this. This caused the Brazilians to get creative and identify a legal gray area that technically allows them to access and enjoy sportsbook sites registered overseas.
Now that Lula de Silva is back in government five years later, he’s aiming to finish off what he started, and with sports betting substantially increasing in popularity over the past couple of years, today Brazil represents the third largest sports betting country in the world, solely surpassed by the US and the UK.
The new Bill 3,626/23 will likely significantly impact the country’s 42.5 million unique sports betting players right now, along with thousands of foreign operators that must be headquartered and administered in Brazil if they plan on operating there.
Foreign Operator Limbo
Unlike the provisional measure, the new law will technically ban foreign operators from offering regulated gambling in Brazil. To continue their business, operators must incorporate under Brazilian law, with admin and headquarters operating within the country.
At this point, it’s hard to say how this will impact foreign operators; however, there are additional requirements regarding minimum share capital, reputation, identity checks, and other technical requirements.
An 18% Tax
The standard 18% revenue tax will remain in place, with additional contributions possibly pushing it toward the 31% mark in the long run, as many have already commented.
Interestingly, gaming revenue percentages have been tweaked this time, with 2% of the revenue earmarked for social security as opposed to the previous 10%. In this case, revenues will also include a 5% contribution towards tourism, 6.6% for sports, and just under 2% for education.
The 300 million Real ($6 million) licensing fee will also stay the same in cost but will be reduced to three years instead of five. This license allows operators the legal right to offer gaming products through a single app, with additional offerings requiring separate licenses.
There will also be several anti-money laundering and counter-terrorist controls and procedures that interested businesses will be expected to comply with.
Goodbye Bonuses
Under the new Brazilian law, operators can no longer offer bonus bets to their players, even when they form part of a promotion. The Bill will also prevent online casinos from offering any form of lines of credit to their users.
Unlicensed companies will also be banned from all forms of advertising in Brazil, with any new ads requiring compliance with the updated guidelines. Finally, senior leadership at online casino companies will no longer allowed to wager in Brazil, as well as any players under 18 years of age.
Updated Payment Rules
And lastly, the new Bill also includes updated rules about payment, with the intention of preventing foreign gambling. Licensed operators will be the only companies authorized by the Central Bank to offer payment services in this regard.
Players can only use their betting account to fund bank accounts headquartered and administered in Brazil.