Paving the way for Regulation in Brazil’s Sports Betting Market’

by | May 31, 2023 | Blog, Digital

The sports betting market is at a critical juncture in Brazil. Despite being legalized in 2018 (through Law 13.756/18), a significant legal vacuum remains in the area. This was caused by a lack of regulation, in turn creating a climate of legal uncertainty, impeding the sector’s growth and leaving stakeholders in a state of limbo. For some time now, the debate has focused on the necessity for swift government action to address this issue and establishing clear rules and guidelines for the area.

The discussion comes at a time where the Brazilian congress faces the difficult task of regulating the fast growing e-sports market in Brazil, and the yet open question of whether to grant it the official status as a sport in the country.

Due to the lack of clear regulation in the sports betting market, diverse problems have arisen, including a lack of oversight and inspection (e.g., to protect against match-fixing), and control measures (e.g., preventing access for minors and monitoring levels of debt accumulation).

Moreover, the absence of regulation hinders efforts to combat money laundering and limits the government’s ability to collect taxes from the industry. Government sources recently indicated that taxation measures could bolster public accounts by between 2 – 8 billion Reais annually (that is, between 385 million to 1.54 billion US$).

In response, the Brazilian government announced in March that it will regulate Brazil’s sports betting industry in 2023. To do so, a provisional measure is set to be issued, which will impose minimum capital requirements and tax obligations on betting operators. Under the law, operators will be required to maintain their tax domicile in Brazil and allocate a portion of their resources within the country.

It is worth noting that the prospects of state-level regulation based on recent court rulings (finding that the Federal Union does not have exclusive jurisdiction over the area), as well as the potential return of the issue to the National Congress, were also previously discussed as potential avenues to address the issue.

In general, the proposal to regulate sports betting in Brazil appears to be receiving widespread support from industry stakeholders, including from internet portals and gaming associations, who see regulation as a necessary path for a more stable and certain environment in which to operate.

It is clear that the current legal uncertainty surrounding Brazil’s sports betting market necessitates immediate regulatory action. The industry holds significant promise, with projections that the GGR (Gross Gaming Revenue) could surpass five billion Brazilian Reais by 2026, if the market is legitimized. However, paving a way for this market will require significant efforts to establish clear rules and guidelines that will not only provide economic opportunities, but also ensure consumer protection, sporting integrity, and fiscal revenue for the Brazilian government.

If you would like to receive more information about the current proposals for regulating the Brazilian sports betting market, please get in touch with one of our experts.

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