Sports betting in Brazil will have an open licensing regime

Alexandre Manoel, secretary for Public Policy Evaluation, Planning, Energy and Lottery of the Ministry of Finance.

The Federal Government of Brazil already has the basis of the draft decree which will regulate sports betting. The decree will be submitted to the Executive Power and to Congress before the month of December at the latest. Two operating models were evaluated, both for live and online betting. The first one was a ‘concession model’, a bureaucratic form of license granting for a few or a single operator. The second one was an ‘authorization/permission model’, based in a free market environment that allows anyone who fills the legal and regulatory requirements to operate. The latter, an open licensing regime, will be presented to approval for Congress. Besides, the country will seek to apply a reduced tax rate of one percent on turnover.

Regarding this key issue, there was a recent debate during the seminar ‘Sports Lottery and Football: Regulation and Sponsorship Opportunities’, part of the Brasil Futebol Expo, organized in São Paulo by the Brazilian Football Confederation (CBF). Alexandre Manoel (secretary for Public Policy, Planning, Energy and Lottery Evaluation, SECAP); Ludovico Calvi (president of the Global Lotery Monitoring System, GLMS); and Magnho Jose (president of the Brazilian Institute of Legal Gambling, IJL) took part of the panel.
In August, a public consultation was held about sports betting regulation in the country, with an amazing response of 1,849 suggestions. According to Manoel, the guidelines of the draft decree will include authorization, taxation and criminalization of those who do not follow the rules to be established. In order to operate in Brazil, companies will have to pay an authorization fee of R$3 million (US$738,000) in a single installment. This license will be valid for nine years. After nine years, the operator will have to pay again, with some kind of readjustment. The tax regime chosen will be 1 percent of the turnover (5 percent to 7 percent of GGR).

About penalty, the idea is to change the Penal Code, increasing the punishment for those companies working outside the law. This will require approval of the National Congress. Under the project, those responsible for operating any form of unauthorized gaming will be subject to imprisonment of one to five years and a fine. As for those who participate in manipulation of results, they will be punished with detention of two to eight years, in addition to a fine.

For his part, Calvi (GLMS) outlined the significant opportunities the legalization of sports betting in Brazil will bring for the whole Brazilian society, but also flagged relevant risks. He remarked the need for a sustainable regulatory framework that allows for an attractive betting offer, but, at the same time, prevents social and public order risks, like gambling addiction, money laundering and sport competition manipulations.