Government plans to charge grants from sports betting companies that want to operate in Brazil – 03/21/2023 – Market

Measure prepared by the Ministry of Finance to regulate and tax sports betting made over the internet will also bring a device to require companies in the sector to pay a grant amount to operate in Brazil.

The government’s idea was presented in an interview with Reuters by the CEO of sports betting company Galera.bet, Marcos Sabiá, who participated in meetings about the measure with members of the Ministry of Finance.

Reuters confirmed the plan for charging the grant with a source from the folder that draws up the measure. According to that authority, the charge to release operations in the country will be part of a provisional measure to be presented by the government after the presidential trip to China at the end of the month. According to her, the amounts to be charged from companies are still being defined.

Sabiá stated that with the regulation, the government will receive requests from companies that are interested in operating in Brazil and will assess their financial and administrative capacity.

“These companies will need to pay a significant amount to obtain the operating license in Brazil. This shows that they will have the capacity to operate”, said the executive. “It is quite important to have (the charge for the grant), even as a measure of the company’s financial capacity.”

Sabiá stated that companies currently operating in the country support regulation, noting that in the G20 only Brazil and Indonesia do not have clear rules for the sector.

According to him, the amounts raised with the grant may be directed towards structuring the government area that will regulate and supervise this market.

The president of the Instituto Brasileiro Jogo Legal, Magnho José, said that most countries that regulate sports betting charge grants and taxes on the sector.

“The charge for the grant is healthy for the market because it helps to select and qualify qualified operators for the operation,” he said. In so-called fixed odds bets, the bettor tries to predict the results of sporting events, such as the score, number of yellow and red cards, goal scorers and player substitutions. When betting, the person already knows how much he can win if he hits, by applying a multiplier of the bet amount.

In advanced economies, a number of companies in the sector are listed on stock exchanges. This is the case of Playtech —which formed a joint venture to create Galera.bet in Brazil—, Entain and DraftKings Inc.

A law passed in 2018 authorized sports betting in Brazil, but determined future regulation of this market, which was not done. Therefore, the government cannot tax the sector.

In recent years, companies in the sector have grown in popularity in Brazil, taking on a series of sponsorship contracts for sports clubs, in addition to advertising on television channels and social networks of digital influencers.

According to industry data, at least 20 companies already operate in the online sports betting market in Brazil. Among the brands are Bet365, Sportingbet, Sportsbet, Pixbet and Betano.

When presenting the intention to edit the measure to regulate this market, the Minister of Finance, Fernando Haddad, said earlier this month that tax collection from the sector would be used to offset the increase in the Income Tax exemption band announced by the government . The cost of this benefit is estimated at 3.2 billion reais this year.

The lack of regulation and the fact that most companies are headquartered abroad makes it difficult to make a more precise analysis of the sector’s size and potential taxation, Sabiá said. Preliminary estimates by the Treasury pointed to an annual collection of between 2 and 8 billion reais after the enactment of the provisional measure.