The way of gambling legalization in Brazil

Introduction

Gambling has been banned in Brazil for a long time, but the legal environment has changed in recent years.

The Brazilian government is openly expressing its desire to encourage the development of tourism in the country, and the authorization of casinos is one of the many steps in this direction. As the country's economic growth and middle class expand, the level of income available for entertainment is gradually increasing, which contributes to the growing popularity of gambling.

 

The Brazilian Chamber of Deputies passed bill 3626/2023 that legalizes gambling in the country, including sports betting and casinos. The bill had 277 amendments and was considered for 120 days and approved on September 13. The text will now be transferred to the Senate, where final approval at the federal level is expected to take place. This event attracts considerable attention from investors and entrepreneurs, providing new opportunities for the development of the gambling industry in the country.

 

First steps towards legalization

So far, everything indicates that the legalization of gambling in Brazil is getting closer to reality. However, the bill will have to go through an equally long way of approval through the Senate. This process may take some time, but the first steps towards the opening of a new gambling market have already been made.

Ensuring fairness and transparency

The document contains recommendations aimed at ensuring the integrity of betting, preventing manipulation of the results of sporting events and eliminating corruption. One of the recommendations is a ban on betting for “influential persons” such as sports directors, coaches, players, and managers. Additional measures include the obligation for all licensed operators to implement mechanisms that guarantee the integrity of betting and prevent possible manipulation.

 

Taxation and licensing parameters

More detailed information on tax rates and the licensing process has become available. It is important to note that there are no restrictions on the number of operators that can engage in this type of business in Brazil, as the government and Congress are committed to creating a competitive market.

The Ministry of Finance charges a fee of 30 million reais, which is approximately EUR 5.7 million, for a gambling license, which grants both domestic and international companies, including state lottery operators, the right to conduct betting for up to three years.

The reduction of the initial tax rate on profits from 18% to 12% creates more attractive conditions for business. Payment service providers will be required to obtain accreditation from the Central Bank of Brazil to process payments and withdrawals from customers participating in betting. These measures are aimed at ensuring the legality of operations in the market.In addition, the law will introduce a 30% tax on prizes won in excess of 2,112 reais (398 euros/427 US dollars).

Restrictions and requirements

Licenses will be limited so that operators will need to authorize each individual brand and activity under a single authorization act. Operators will also have to meet certain requirements, including having a customer support service, membership in an integrity organization, and adherence to strict rules on advertising and promotion.

Payment Service Providers (PSPs) are subject to strict regulations and must be accredited by the Central Bank of Brazil (BCB) as “authorized institutions” to process payments and withdrawals from customers participating in betting. It is also important to note that licensed operators can only conduct financial transactions with financial institutions that are “headquartered and administered in Brazil and authorized to operate by the BCB,” which is intended to provide protection against illegal black market transactions.

 

Protection against illegal operations

Operators that violate the rules of the new law may be subject to significant financial penalties. The amount of the fine for corporations will depend on the seriousness of the violation and may range from 0.1% to 20% of the operator’s annual revenue. It is important to emphasize that the maximum fine is capped at 20 million reais, which is approximately 3.8 million euros.

 

Conclusion

Overall, Draft Law 3626/2023 creates new opportunities and arouses interest among global gambling operators. The country provides stable conditions for business, ensuring legal transparency and tax clarity. If the law on betting is adopted, international investors will focus on the promising Brazilian gambling market.

 

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