Government publishes MP establishing taxation of 18% on revenue from sports betting companies
The purpose of the MP is to regulate sports betting, implementing a tax of 18% on the revenue generated after the payment of prizes to bettors and the deduction of income tax on prizes.
The MP establishes a tax on bets and implements rules to avoid game manipulation - Photo Reproduction/Internet
The federal government published this Tuesday (25) the Provisional Measure No. 1,182, which aims regulate sports betting and establish a fee of 18% on the "Gross Gaming Revenue" (GGR), which corresponds to the revenue generated after the payment of prizes to players and the deduction of income tax (IR) on prizes. The disclosure took place through the Official Gazette of the Union and the new rules took effect immediately. However, the National Congress must analyze and vote on the Measure within 120 days to prevent it from losing its validity.
Provisional Measure
In May, the Ministry of Finance presented a proposal aimed at taxation of bets, together with the implementation of rules to avoid game manipulation. At the time, the government signaled a 16% stake. According to Treasury projections, the regulation could generate a collection of BRL 2 billion by 2024. In subsequent years, it is estimated that this value may vary between BRL 6 billion and BRL 12 billion.
The Provisional Measure (MP) promotes amendments to Federal Law No. 13,756, which was published in 2018 and regulates the operation of fixed-quota lotteries by the Union, popularly known as "bets". Previously, the law established that this modality was an exclusive public service of the Union. However, the term "exclusive" was removed from the text with the MP.
The Provisional Measure stipulates various restrictions for sports betting. Firstly, the participation of minors under the age of 18, as well as public agents responsible for overseeing the sector, is prohibited. In addition, people who have access to computerized fixed odds betting lottery systems will not be able to place bets, as well as individuals who can influence the results, such as coaches and referees. Another restriction applies to those enrolled in national credit protection programs.
The Provisional Measure also determines that partners and shareholders of betting companies cannot hold management positions in sports organizations. In addition, betting companies have the responsibility to inform the Ministry of Finance of any suspicion of manipulation of results. In addition, they are required to promote awareness actions among gamblers in order to address gambling addiction.
You prizes not claimed by winners within the period of 90 days will be directed to Student Financing (Fies) until July 2028. After this period, the funds will be transferred to the National Treasury.
Betting companies
A new regulation will be implemented for betting companies, prohibiting them from acquiring, financing or licensing the rights to events sports held in the country. This measure covers the emission, transmission, retransmission, reproduction or distribution, as well as any other form of display of children and images related to this sports content. In addition, according to the Provisional Measure, the operating agent must be part of a national or international body responsible for monitoring sporting integrity.
In relation to inspection activity, the Ministry of Finance will have the power to determine the suspension or hold of all bets placed by operating agents on intercurrent or specific events that progressed during the test or the match, except when it is a specific prognosis of the final result.
Tax
In addition to the 18% tax on the GGR for companies, the new measure determines that 82% of the revenue is kept by "bets" for its operations. These fees were allocated as follows: 10% for social security contributions, 0.82% for basic education, 2.55% for the National Public Security Fund, 1.63% for clubs and athletes associated with betting through their names and symbols, and 3% for the Ministry of Sports.
The government also implemented an increase in transfers to the Ministry of Sports, from 1% to 3%. Previously, according to the 2018 law, participation was up to 5% of companies' revenue, after payment of prizes, income tax on prizes and contribution to social security, the latter having a rate of 0.10% for physical bets and 0.05% for virtual bets.
