Bill 3,626/2023, also known as the Brazil regulation for legal-compliance, was signed into law by the head of state on 30 December. This approval came after Brazil’s chamber of deputies voted on 21 December to endorse the bill. It is noteworthy that igaming was added back into the bill after previously being removed by the senate.
Under the new law, President Lula vetoed a proposed income tax exemption for customer earnings of under R$2,112, instead deciding that personal net winnings will be taxed at 15%. Furthermore, operators will be taxed at 12% of their gross gaming revenue, with a significant portion allocated to sports development. These taxation recommendations were submitted by the Economic Affairs Commission on 22 November.
The new law also allows for fixed-odds bets, which will be regulated by the country’s ministry of finance. Operators must apply for a five-year license, with a fee of R$30m for up to three brands. Additionally, operators are required to provide self-exclusion options for customers ranging from 24 hours to six weeks. It is mandatory for operators to have a Brazilian board member with a minimum 20% share capital in the company, and they must verify the identities of all bettors using facial recognition technology.
The ministry of finance will soon publish regulatory guidelines for operators, as over 130 businesses have expressed interest in obtaining licenses. According to Neil Montgomery, founder and managing partner of Brazilian law firm Montgomery & Associados, it is expected that a regulated market will be operational by the second half of 2024. This allows ample time for operators to establish their presence in Brazil by setting up necessary structures and selecting Brazilian partners if required.
The inclusion of igaming in Bill 3,626/2023, after initially being removed, was seen as a natural step due to its financial benefits. Despite opposition, the government recognized the importance of including igaming for its budget in 2024. Hugo Baungartner, vice-president for global markets at Brazilian casino operator Aposta Ganha, highlights the significance of this inclusion and the potential for future expansions in other verticals and markets.
The first year following the market’s regulation is expected to bring an avalanche of foreign direct investment, along with mergers and acquisitions. The establishment of foreign operators in Brazil will likely result in increased legal activity, including potential litigation by disgruntled customers. This newfound accessibility for customers to seek legal remedies in Brazil could lead to an initial wave of such cases.
