On 25 July 2023, Brazil’s President signed the Provisional Measure nr. 1.182/2023 (hereinafter the “MP”)[iii], which constitutes a ‘kickoff’ for the regulation of fixed-odds sports betting in Brazil.
The MP’s focus is to amend some provisions of the Federal Law nr. 13.756/2018, which legalized fixed-odds sports betting in Brazil and permitted such activity to be exploited by the private sector through a license to be granted by the regulator. By doing so, the MP provides a clearer view of the next steps to be adopted in order to regulate the sector.
The most relevant changes brought by the MP are:
1 – Taxation on the betting operators: Perhaps the most significant change introduced by the MP is the 18% tax on the operators’ GGR (Gross Gaming Revenue). Notwithstanding, it is important to highlight that this will not be the only tax that the licensed operators shall pay in Brazil. There will be other applicable taxes (including federal and state taxes).
2 – The Regulator – The Ministry of Economy will be the regulator according to the MP. There is a rumor that the Ministry will create a specialized body within its structure to oversee the sports betting market (namely, the Secretaria Nacional de Jogos e Loterias)[iv]. In the foreseeable future, the regulator is set to issue the guidelines (the so-called Portarias) for obtaining the authorizations (or licenses), the stipulation of the respective price (or licensing fee) to be paid by operators and other specific rules for the sector.
3- Advertising – The Conselho Nacional de Autorregulamentação Publicitária (CONAR), which is the body responsible for the self-regulation of advertising in Brazil, is set to outline the guidelines, restrictions, and recommendations for marketing and advertising endeavors in the sector.
4 – Broadcasting Rights – The MP also restricts the possibility of sports betting operators and their controllers to purchase, license, or finance the acquisition of broadcasting rights of sports events conducted within the country.
5 – The Fight against the ‘Grey Market’ – Three key measures will be implemented in Brazil in order to prevent unlicensed operators to exploit the Brazilian market: (i) banning advertising, marketing activations or sponsorships by unlicensed operators within the country, (ii) blocking IPs (Internet Protocols) of unlicensed operators, and (iii) prohibiting PSPs (Payment Service Providers) to provide payment services in favor of unlicensed operators.
6 – Sports Integrity – In order to safeguard the integrity of sports competitions and in response to recent match-fixing scandals in Brazil, the licensed betting operators shall implement integrity measures in its operation and report any suspicious activities to the regulator.
7 – Regulatory Sanctions – The MP establishes a comprehensive set of criteria for imposing sanctions on the licensed operators. The evaluation encompasses various factors, including the severity and duration of the infraction, the offender’s history, and the potential impact on the economy, sports, and consumers. The possible sanctions include warnings, imposition of substantial fines, suspension of activities, revocation of existing authorizations, and a restriction on obtaining new authorizations for up to a 10-year period.
Hence, the sports betting sector in Brazil is still unregulated. The effective regulation of sports betting will occur after the issuance of the set of Portarias by the regulator, which will set out a clear framework for the licensing process, establish the definitive requirements/rules, standards, and guidelines that operators must adhere to, thereby ensuring the maintenance of appropriate conduct and practices within the sector.
Our legal team at Bichara and Motta Advogados are attentively monitoring the regulation of sports betting in Brazil, offering legal advice to multiple market participants. For further information, please visit www.bicharaemotta.com.br.
[i] Head of the Gambling & Crypto department at Bichara & Motta Advogados. Graduated from the Pontifical Catholic University of Rio de Janeiro (PUC-Rio). Master (LLM) in International Sports Law from the Institute of Law and Economy (ISDE) in Madrid, Spain. Member of the National Academy of Sports Law (ANDD) – Youth Commission. Vice President of the Sports and Entertainment Commission of OAB/RJ – Barra da Tijuca subsection. Member of the Special Commission of Sports, Lottery and Entertainment Law of OAB/RJ. Email: firstname.lastname@example.org
[ii] Intern in the Gambling & Crypto department at Bichara & Motta Advogados. Undergraduate student at the Pontifical Catholic University of Rio de Janeiro (PUC-Rio). Crypto Market Analyst and founder of the legal community (pedroheitor.eth). Email: email@example.com