Brazil Sports Betting Ready for Launch as Government Lays Out the Rules

Posted on: May 4, 2022, 05:33h. 

Last updated on: May 4, 2022, 04:31h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Brazil is a step closer to expanding its gaming industry. The government has released draft rules for the sports betting segment that will find a lot of support from operators.

Brazil
The Christ the Redeemer Statue in Brazil, above, is one of its most recognizable monuments. The country is advancing its sports betting industry, with new legal options arriving. (Image: Getty Images)

Brazil’s gaming industry is undergoing some fundamental changes. Even though the subject of casinos is still controversial, other forms of gaming entertainment are finding more support. Sports betting is going to be big business in Brazil, and the Secretariat of Evaluation, Planning, Energy and Lottery (SECAP, for its Portuguese acronym) is laying out the rules.

As long as no one tries to make any modifications, the draft rules will be final when they receive President Jair Bolsonaro’s signature. Currently, that could happen in less than a week, and sports betting operators are already champing at the bit.

Sports betting operators will need to receive a license under the regulations established by the Ministry of the Economy. However, there is no limit to the number of licenses – all the operators that want in on Brazil’s sports betting activity are welcome.

All Sports Betting Operators Welcome

Companies already operating in Brazil will receive six months to meet the provisions of the approved rules after the decree is published. If they don’t, they won’t be able to qualify for a license. Currently, there are up to 500 foreign operators, according to data from H2 Gambling Capital.

Licenses will be valid for five years, and to obtain one, operators will need to pay R$22.2 million (US$4.47 million). For a market worth over $1.4 billion, according to estimates, the expense will be worth it to many operators.

For foreign companies to operate in Brazil, they must have a subsidiary in the country. They will also need to show enough capital and sufficient economic and financial capacity to support the activity to be carried out.

The decree defines issues such as the deadline for payment of premiums and conditions for the collection of the contribution to Social Security funds. It also covers the amounts related to social transfers, as well as the collection of income tax on the award.

The exact income tax rate was not indicated in the decree. As previous legislative discussions suggested, the rate will be based on the amount of revenue the operators take in.

All sports and eSports contests are on the table, as long as the activity doesn’t exclusively include minors. In addition, all operators must sign a contract with some type of integrity association, such as the International Betting Integrity Association. Any data concerning integrity issues operators share with that organization must be forwarded to Brazil’s Ministry of Economy.

Forming the Regulatory Structure

The Ministry of Economy will designate the new regulatory body to authorize and supervise sports betting operators. While it could create a new entity or choose another, this isn’t the most likely route. The ministry just approved a new Secretariat for Special Affairs, Lottery and Export Processing Zones (SALEPZ) and tapped a new leader to take over as the Undersecretariat of Prizes and Draws.

Absent any formal verification, these changes were almost certainly precursors to the formation of the sports betting regulatory regime. SECAP is now part of the Special Secretariat of Productivity and Competitiveness (SEPEC, for its Portuguese acronym).

This latter organization includes the Secretariat of Competition Advocacy. The SALEPZ oversees all lottery activity and is the likely candidate to regulate sports betting.

The regulatory body will have 30 days to review the documentation and notify the interested party to submit the final documents. Within 60 days, it must complete the examination of the approval of the application.

Operators will now begin lining up to take a number. Bolsonaro could approve the new regulations by May 10, after which they would take effect within three months. That would set up the market just in time for the NFL season in the fall.

A report by Sportico from 2021 indicates that Brazil has more NFL fans than any other country outside the US. This could serve as a springboard for a strong launch of the new sports betting regime.