On the precipice of a pivotal transformation, Brazil’s Economic Affairs Committee (CAE) gave the green light for comprehensive legislation to legalize sports betting and igaming — a notable development in Latin America’s largest nation. The confirmation came last Wednesday, 22 November, when the CAE favorably voted on Bill 3,626/2023, signaling a crucial step towards Brazil’s embrace of a regulated online gambling economy. This advancement sets the stage for a significant Senate plenary vote scheduled on Wednesday, 29 November, potentially marking the official authorization of sports betting and igaming in the country.
The CAE’s endorsement of the bill not only overturns a previous decision to delay the vote but also paves the way for a more favorable tax environment for operators who had been previously critiqued for an 18% tax rate under Provisional Measure (PM) 1,182. Significantly, the tax rate has now been adjusted to 12%, following intense scrutiny and discussions within the legal and business communities. Further detailing the allocation of tax proceeds, the legislation outlined that sports would receive 36%, tourism 28%, with public safety, education, and social security each obtaining a portion of the revenues.
Amid ongoing debates, efforts to exclude igaming from the bill, which had been incorporated as late as September, were also promptly rejected. The inclusion of igaming marks a major leap from earlier legislation, reflecting the rapidly evolving dynamics within Brazil’s gambling sector.
To fully grasp the current state of affairs, one must recognize the accelerated momentum Brazil’s sports betting landscape has gained, commencing earnestly in the latter half of the year. It was in May 2023 that the Brazilian government, led by President Luiz Inácio Lula da Silva, heralded PM 1,182, which ultimately became law by July. The measure, however, was received with substantial opposition stemming from concerns over high taxes, stringent advertising guidelines, and vague payment regulations.
But it was Bill 3,626/2023 that rekindled the discourse, proposing amendments to PM 1,182 and notably introducing online casinos into the equation. The legislation remained firm on the contested 18% tax rate initially but has since been revised downward. Additionally, Brazil’s Ministry of Finance has mandated that prospective operators must establish a Brazilian subsidiary as a prerequisite for licensing, indicating a commitment to fostering a favorable ecosystem for domestic economic contribution.
In the face of this unfolding narrative, legal experts and industry stakeholders have remained attentively engaged. Neil Montgomery, a preeminent figure in Brazilian legal circles, was not taken aback by the CAE’s approval, citing the Federal Government’s urgency in fortifying fiscal stability. However, the stipulation of a 20% Brazilian ownership requirement for operators applying for a federal license warranted Montgomery’s surprise, describing it as a considerable barrier to market entrance for predominantly foreign operators.
Likewise, industry insider Hugo Baungartner of Aposta Ganha conveyed optimism, though acknowledging that the journey toward a fully regulated market is far from its conclusion. His sentiments align with the broader perception that the bill offers a leap forward in legitimizing the preexisting online sports betting market in Brazil, which has long operated within a gray area.
To further disseminate information and insights on the topic, prominent industry platform iGB is orchestrating a special webinar on 28 November, in collaboration with IDNow. This event promises to offer valuable perspectives and updates just ahead of the anticipated Senate plenary vote.
The motion before the Senate is not merely a legal formality but a watershed moment that could redefine the contours of Brazil’s gambling industry. As stakeholders, policymakers, and citizens alike await the outcome, the nation stands on the cusp of chartering a new course in the realm of sports betting and digital gaming — one that could very well set a precedent for the rest of Latin America.
