Brazilian President Approves Landmark Legislation Regulating Sports Betting and Online Gambling

President Luiz Inácio Lula da Silva, associated with Brazil's Workers' Party (PT), has officially given his approval to a comprehensive law regulating the country's sports betting and online gambling market. The enactment of Law 14.790/23, previously known as PL 3.623/23 during its legislative journey, marked the culmination of extensive negotiations between the government and Congress throughout the year 2023. This law, positioned as a crucial element of the government's economic strategy to bolster federal revenue, includes a myriad of provisions designed to effectively regulate and tax the burgeoning online gambling and sports betting sector in Brazil.

A pivotal aspect of the law revolves around the imposition of a 12% tax on the income generated by bookmakers, with this tax calculated after deducting the payout of prizes. Simultaneously, players engaging in these activities are mandated to pay a 15% tax on their winnings. To participate in sports betting within Brazil, companies must obtain a license, the acquisition of which comes at a significant cost - BRL 30 million or approximately $6,179,700. Eligibility for these licenses is restricted to companies incorporated under Brazilian law, with their headquarters and administration situated within the country and featuring at least one Brazilian partner.

The legislation places a strong emphasis on responsible gambling practices, introducing stringent regulations to safeguard participants. Individuals below 18 years of age are explicitly barred from engaging in betting activities, and individuals diagnosed with compulsive gambling disorders are similarly restricted from participation. Importantly, the law prohibits the involvement of specific individuals, such as sports leaders, referees, and athletes, who may have the potential to influence the outcomes of games.

Expanding its regulatory scope, the legislation encompasses rules for online games and casinos, with a particular emphasis on fostering responsible behavior within the gambling landscape. Advertising and promotional activities on gambling sites are also subject to detailed regulations, and the law outlines specific offenses and corresponding sanctions for non-compliance with its stipulations.

The government has further delineated a detailed plan for the allocation of funds generated through these gambling activities. The distribution of these funds is earmarked for various sectors, with allocations to the Ministry of Sports and sports committees (36%), tourism (28%), public safety (13.6%), education (10%), social security (10%), health (1%), civil society organizations (0.5%), the Fund for Equipment and Operationalization of the Final Activities of the Federal Police (Funapol) (0.5%), and the Brazilian Industrial Development Agency (0.4%).

While the law secured approval from the Chamber of Deputies on December 21, it wasn't without vetoes. The government exercised its veto power on sections that sought to exempt prizes below BRL 2,112 (approximately $435) from taxation, citing concerns about maintaining tax equality. Furthermore, proposed rules allowing commercial promotion and the filing of complaints, investigations, and accountability related to the distribution of prizes and sweepstakes of up to BRL 10,000 faced vetoes. These vetoes will undergo scrutiny by the National Congress, where deputies and senators will collectively determine whether to uphold or override the presidential decisions in a joint session.

By fLEXI tEAM