The House of Representatives approved Bill of Law 3626/23, known as the “Betting Bill of Law“. The Bill of Law, after being amended by the Federal Senate, returned to the House where it was approved with additional amendments. Consequently, the following provisions were established:
- Online games have been reinstated into the range of modalities encompassed by the Betting Bill of Law.
- Only entities incorporated in Brazil will be eligible to receive authorization to conduct fixed-odds betting.
- Operators are required to implement a variety of internal control policies. These include, but are not limited to, (i) customer service and ombudsman, (ii) Know Your Customer (KYC), Anti-Money Laundering (AML), and counter-terrorism financing mechanisms, (iii) responsible gambling measures, (iv) prevention of pathological gambling disorders, and (v) maintaining the integrity of betting and preventing the manipulation of results, among other relevant measures.
- The Ministry of Finance (“the Regulator”), will set the conditions and deadlines, which will be no less than six months, for existing betting operators to conform to the provisions of this Bill of Law and to the specific regulations.
- The authorization fee has been capped at a maximum of BRL 30 million (thirty million reais), valid for up to five years, and is applicable to a maximum of three trademarks (URLs).
- Operators can offer fixed-odds bets both online and in physical locations, either independently or in combination. However, online games, including casino games, are to be exclusively offered in digital formats, with no provision for physical availability.
- As anticipated by the market, marketing activities must adhere to the regulations set by the Ministry of Finance, which promote self-regulation. This includes incorporating warnings to discourage gambling and alerts about its detrimental effects in marketing campaigns, along with the development of a code of conduct and the propagation of good market practices. Operators, along with their subsidiary and parent companies, are forbidden from acquiring, licensing, or funding the acquisition of rights to sports events held in Brazil for the purpose of broadcasting and transmission.
- Betting operators are required to join a national or international sports integrity monitoring organization.
- The Betting Bill of Law imposes a prohibition on unauthorized betting operators from conducting marketing activities in Brazil. It also mandates the removal of such promotions, within existing technical constraints, by internet application providers. Furthermore, the Betting Bill of Law stipulates the blocking of websites involved in providing unauthorized fixed-odds betting, to be executed by internet service providers upon notification from the Regulator. Additionally, payment and financial institutions are barred from facilitating or permitting transactions with these platforms.
- Betting operators must develop systems to track and monitor bettors’ activities, aiming to identify and mitigate potential harms associated with betting.
- The taxation rate for betting operators has been set at 12% of Gross Gaming Revenue (GGR). This, however, will not be the sole form of taxation applicable to operators.
- Bettors will be taxed at 15% annually on net gains exceeding the annual Income Tax exemption threshold.
In a forthcoming regulatory act, which will be issued by the regulator, betting operators will need to comply with specified technological and cybersecurity standards, including recognized national or international certifications, as well as certain legal and financial requirements.
Once the final text is drafted by the Constitution, Justice and Citizenship Commission of Brazil, the Betting Bill of Law will proceed to presidential sanction. At this stage, the President will have a period of 15 working days to sanction or veto the project, either in whole or in part.
Our legal team at Bichara and Motta Advogados are attentively monitoring the regulation of the betting industry in Brazil, offering legal advice to multiple market participants. For further information, please visit: www.bicharaemotta.com.br.
