Sports betting to be taxed at 18%, according to new Provisional Measure

by | Jul 25, 2023 | Blog, Digital, Games

On 25 July, the Brazilian government published a new Provisional Measure in the Official Gazette of the Union that regulates sports betting. According to the document, betting practices will be taxed at 18% on the gross gaming revenue (GGR), which is the revenue obtained from all games less the prizes paid to the players and taxes levied on legal entities.

Previously, it had been announced that the taxation would be 16%. However, the MP published on Tuesday establishes a 3% allocation to the Ministry of Sports, instead of 1%, which raised the total to 18%.

The rules are already in effect but will need to be analyzed within 120 days by the National Congress to remain valid.

Key points of the MP

Companies offering the bets will be taxed at 18%. This taxation will be levied on the Gross Gaming Revenue (GGR), which is the revenue obtained from all games less the prizes paid to the players and taxes levied on legal entities.

The players will be taxed at 30% on Income Tax. Whenever they obtain a prize above the exemption of R$2,112 (exemption threshold), there will be taxation related to Income Tax. The Ministry of Finance had already stated that over 70% of sports betting prizes would be exempt with the change.

The revenue from the fees and taxes will be allocated to areas such as public security, basic education, sports clubs, and social actions. The total revenue will be divided to benefit various sectors of society.

Thus, from the 18% on the GGR:

  • 2.55% will be allocated to the National Public Security Fund (FNSP) for actions against match-fixing, money laundering, and other criminal acts related to or arising from betting;
  • 0.82% for basic education;
  • 1.63% for sports clubs;
  • 10% to social security; and
  • 3% to the Ministry of Sports;
  • The remaining 82% will go to the Operators.

The MP also determines that minors, persons who could influence the results of the betting, and those with negative credit history cannot make sports bets. The following are prohibited from participating in the system: those under 18 years old; individuals who have a direct influence on the results of games, such as referees and athletes (including spouses and second-degree relatives); people with access to computerized fixed-odds betting systems; public agents who oversee the sector at the federal level (including spouses and second-degree relatives); and those registered in national credit protection databases (credit agencies).

Prizes that are not claimed will be directed to Student Financing (Fies). Betting parties lose the right to receive their prizes or request refunds if the payment is not claimed within 90 days from the date of the first announcement of the result of the real event on which the bet was placed.

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