LOVEJILI 21.LOVEJILI link,Lovejili philippines

Brazil Lower House Approves Sports Betting Tax Overhaul

  • The measure bases sports betting taxes on gross gaming revenue instead of turnover
  • A small percentage of the taxes will be allocated to Social Security
  • Other portions of the tax will go to education, police, and sports teams
  • Rio de Janeiro is a month away from announcing the state lottery and sports betting operator
Woman leaning out of a car window flying a Brazil flag
The Plenary of the Chamber of Deputies of Brazil has approved a bill to tax sportsbooks based on their gross gaming revenue, rather than turnover. [Image: Shutterstock.com]

Tax on GGR, not turnover

Brazil is on its way to revamping its sports betting tax regime, introducing a more reasonable, streamlined system that directs funds to specific targets. Plenary of the Chamber of Deputies of Brazil approved Provisional Measure 1.034/2021 on Wednesday, which not only addresses sports betting industry taxation, but also deals with taxes in the financial and chemical industries.

The primary change is that sports betting operators will be taxed based on their gross gaming revenue (GGR), rather than turnover. Gross gaming revenue is effectively the operator’s profit, the amount wagered minus the winnings paid to customers. Turnover, on the other hand, is the total amount bet.

providing stable flows of public revenue and prizes”

“Experience in Europe shows that it is better to adopt the operator’s gross profit as a basis, providing stable flows of public revenue and prizes and making bettors use the services of local operators,” said Deputy Moses Rodrigues.

Tax beneficiaries detailed

With the switch from taxing turnover to taxing gross gaming revenue solved, the next issue was how to slice up the rest of the pie. After a 30% income tax is removed, retail (brick-and-mortar or “physical media” as the legislation calls it) sportsbooks’ GGR will be taxed at 0.10% to pay into Brazil’s Social Security program, while online sportsbooks will be taxed half that, 0.05%.

The vast majority of the rest of sports betting tax proceeds – 95% – will be used to cover the expenses of the national gaming and betting regulator. Of the remaining piece, 2.55% will go to the National Public Security Force (FNSP). 1.63% will be paid to Brazilian sports entities like teams and leagues that allow their names, logos, and other intellectual property to be used for sports betting purposes. 0.82% will go to public schools.

Online sports betting with offshore operators is quite popular in Brazil, but domestic sportsbooks do not exist just yet. In December 2018, then-President Michel Temer signed a bill to legalize both retail and internet sports betting. There were still a number of legislative hurdles, but the final one was cleared last August when current President Jair Bolsonaro signed Decree No. 10,467 to allow the formation of the sports betting industry to commence.

Rio de Janeiro contract competition underway

Some of the landscape of Brazil’s sports betting industry is about to take shape. In May, the State Lottery of Rio de Janeiro (LOTERJ) initiated the tender process for the state’s lottery and fixed-odds sports betting contract. The estimated value of the five-year contract is BRL$260.5m (US$51.6m).

LOTERJ believes the operator who lands the deal could generate BRL$400m ($US79.2m) in revenue in the first year and up to BRL$1.06bn (US$210m) by the fifth year of the contract.

Any prospective operator – retail or online, domestic or foreign – may submit a proposal. Operators based outside Brazil, however, must partner with a domestic company. LOTERJ will announce the winner on July 2. That winner must then pay a BRL$30m (US$5.9m) fee within five days or risk being passed over.

Leave a Reply

Your email address will not be published. Required fields are marked *