Brazil's Landmark Approval: Online Gambling Regulation Clears Final Hurdle with Chamber of Deputies Vote

Brazil's chamber of deputies has marked a significant milestone by granting final approval for the regulation of online gambling, encompassing sports betting and online casinos, through the passage of Bill 3,626/2023. This development follows a crucial second vote, as the senate had made notable changes to the bill, including the removal of provisions related to online gambling, virtual games, and sports betting terminals. The bill had initially received approval in September but required the chamber of deputies to vote again to endorse the senate's alterations.

Senator Angelo Coronel presented the revised bill to the senate on December 12, incorporating the latest amendments, which had been introduced following the initial approval of the bill by Brazil's Economic Affairs' Commission three weeks earlier. The senate voting process saw key highlights, including the exclusion and subsequent reinstatement of online gambling, as well as the rejection of virtual games and sports betting terminals. Additionally, an amendment prohibiting sports betting advertising in stadiums was turned down.

One crucial aspect of the bill involves taxation, with the approval of recommendations by the Economic Affairs Commission, setting the gross gaming revenue (GGR) tax at 12%, down from the initially proposed 18%. Furthermore, there were modifications to the taxation on winnings, with bettors now subject to a once-a-year tax at a rate of 15% on net winnings, exceeding the exemption threshold of BRL2,112.

The bill stipulates an initial fee of up to BRL30 million for licensees, granting them the right to operate up to five different brands. Despite challenges and opposition, the bill's approval positions Brazil to regulate its online gambling market in 2024, pending the final approval by President Luiz Inacio Lula da Silva.

A noteworthy aspect of the legislative process involved the reinstatement of online gambling into the bill by the chamber of deputies after its removal by the senate. This decision was met with anticipation, and Neil Montgomery, founder and managing partner of Brazilian law firm Montgomery & Associados, had predicted opposition to online gambling, particularly from the Evangelical Parliamentary Front. The debate during the voting highlighted differing perspectives, with proponents emphasizing the need for regulation to curb potential issues like money laundering, while critics expressed concerns about the societal impact.

Assuming President Lula da Silva grants final approval, the tax revenue generated from online gambling will be allocated to various sectors, with 36% directed to sports, 28% to tourism, 14% to public safety initiatives, and 10% each to education and social security. The bill also outlines stringent requirements for operators, including the need for a Brazilian partner holding a minimum of 20% of the company's capital and the implementation of cybersecurity systems. To qualify for a license, operators must gain approval from the Ministry of Finance and adhere to identification processes, potentially involving facial recognition technology.

The comprehensive legislative journey leading to the regulation of online gambling in Brazil has been characterized by a series of amendments, debates, and changes. The initial push began in May with the announcement of PM 1,182 for sports betting, followed by President Lula da Silva signing it into law in July. Subsequent bills and amendments, including Bill 3,626/2023, aimed to refine the regulatory framework and address concerns related to tax rates, advertising restrictions, and ambiguous payment regulations. The final approval of the bill by President Lula da Silva would signify a crucial step toward the realization of a regulated and legalized online gambling market in Brazil.

By fLEXI tEAM