Sports betting is a form of gambling based on predicting actual sports results. In Brazil, regulation is in the process of being fully established, following the introduction of Law No. 13,756/18 and Provisional Measure No. 1,182/2023 (“MP”). Prior to Law No. 13.756/18, most types of gambling were prohibited in Brazil. This is due to Decree-Law No. 9,215 of 1946, which prohibits the operation of gambling throughout the national territory. The Federal Lottery was the only exception, permitted by Law No. 5,768/71.
After the enactment of Law No. 13.756/18 and due to the lack of regulation, a “grey” market of sports betting flourished. Many Brazilians started betting on foreign online platforms, where local regulations did not apply. It is estimated that billions of reais were bet this way, money that could have been taxed and regulated.
The MP is the first step towards the effective regulation of the sports betting market in Brazil, amending some points of Law No. 13,756/18. Until then, this lottery modality was defined as an exclusive public service of the Union. With the MP, sports betting no longer has such exclusivity and becomes subject to concession, permission or authorization, on a costly basis, according to regulations to be issued by the Ministry of Finance. National or foreign legal entities may commercially exploit betting in the national territory, provided that they are duly established in Brazil and meet the other regulatory requirements. There is no limit to the number of licenses for the lottery and its commercialization may be carried out in any commercial distribution channels, both physical and virtual.
The operator’s taxation is now 18% on the GGR – the so-called “Gross Gaming Revenue” (i.e., the proceeds of the lottery), after subtracting the prizes paid and the income tax levied on the prize (Withholding Income Tax of 30%, in case of prizes above the exemption ceiling, of R$ 2,112.00). This taxation (18%) will be composed as follows:
a) 10% as social security contribution;
b) 0.82% to public education entities that have achieved the targets set for the results of the national basic education assessments established by the Ministry of Education;
c) 2.55% to the National Public Security Fund (FNSP);
d) 1.63% to the entities of the National Sports System and to Brazilian athletes or those linked to sports practice organizations based in Brazil, in consideration for the use of their names, their sports nicknames, their images, their brands, their emblems, their anthems, their symbols and similar for the dissemination and execution of the lottery; and
e) 3% to the Ministry of Sport, until 24 July 2028. After this date, the funds will be allocated to the National Treasury, for free use by the Union.
The MP introduced measures to fight the grey market, including blocking unlicensed websites, prohibiting financial institutions from providing payment services to unlicensed operators, and banning advertising and sponsorships from unlicensed operators.
CONAR (the Brazilian Advertising Self-Regulation Council) will establish additional guidelines for the regulation of advertising in the sports betting sector in Brazil.
Licensed operators in Brazil will be required to adopt the principle of responsible gambling and share information on suspected match-fixing activities.
The Ministry of Finance intends to take strict action against operators offering gambling games, such as casinos and roulettes, which are banned in Brazil. If a transgression occurs, they will notify the Ministry of Justice and public authorities to investigate the operator’s illegal activity, which could result in the loss of their operating license.
Any violations of the new rules could lead to fines of up to BRL 2 billion, as well as the imposition of other sanctions, such as partial or total suspension of activities for up to 180 days, revocation of authorization, termination of permission or concession, cancellation of registration, among others.
The next step will be the conversion into law of the MP, the vote on the bill in Congress (PL 3626/23) and the publication of the Ordinances by the Ministry of Finance, whose plan is to implement measures to license and legalize operators, develop strategies to combat irresponsible gambling and ludopathy, implement preventive measures against the manipulation of results, regulate means of payment in collaboration with the Central Bank, and fight the illegal use of VPNs and gambling, measures that will effectively regulate the market in Brazil.
