What are the recent changes in Brazil’s iGaming legislation, their impacts and benefits?

They took Brazil by storm in recent years and seem to be everywhere we look, from television advertisements to football team shirts. The popularity of sports betting houses in the country increased so much that led to changes in the Brazil’s iGaming legislation in 2023.

But what were they and what were their impacts and benefits, both for players and for the betting houses themselves?

Changes in Brazil’s iGaming legislation

In December 2023, Brazil approved Law 14.790/23. Among the main changes imposed by it, private companies will now be able to operate sports betting both online and in physical establishments.

See, below, how this Law will affect sports betting in the country:

• Private companies will be able to operate both online and in physical establishments: until December 2023, sports betting in Brazil was only allowed in lottery shops and was controlled by the federal government. As of January of this year, however, any private company will be able to operate sports betting, whether digitally or in a physical space.
• The minimum age for placing sports bets has increased from 18 to 21 years old.
• Advertisements or any type of publicity targeted at minors have been prohibited.
• Betters must have their identity verified and validated;
• Bookmakers must implement policies to prevent money laundering schemes and promote responsible gambling.

How will sports betting regulation work in Brazil?

It is important to note that, in 2023, Brazil also approved Provisional Measure (MP) No. 1.182/2023, amending Law 13.756/18. Among other changes, this law allows for more control of the sports betting sector. For example:

• Monitoring: betting houses will have to purchase a license to operate in Brazil. The tendency is for a new department to be created in the Ministry of Finance to accredit companies, after a process of document analysis. If approved, the government will monitor the volume of bets and the institutions’ revenue, which will ensure more control over this market.
• Legality: companies approved in the process mentioned above and with valid licenses will be able to receive bets related to sporting events. These events, however, must be official and organized by federations, leagues or confederations. The government will fine betting houses that commit infractions between 0.1% and 20% of the proceeds of the revenue, depending on the severity of the violation.
• Taxes: players with winnings exceeding R$2,112 will have to pay 30% of the value of their total winnings in taxes, which is the same rate applied to lottery prizes. Betting houses, in turn, must be required to pay an 18% tax on Gross Gaming Revenue (GGR), which is the revenue obtained from all games played, minus prizes paid to players and taxes levied on legal entities. Companies in the sector, like any other, will also need to pay PIS, Cofins, Income Tax, CSLL and ISS.
• Money laundering: betting houses must implement strict control and effective monitoring systems to prevent money laundering. They must submit information about bettors to the Financial Activities Control Council (Coaf).

Bookmakers will also need to promote awareness-raising actions regarding pathological gambling disorder, to prevent addiction and ensure the mental health of bettors.

Who won’t be able to bet?

According to the new regulations, the following people will not be able to bet:

• People under the age of 21;
• Public agents who oversee the sector at federal level;
• People with access to computerized fixed-odds lottery betting systems;
• People who may have influence on the results of games, such as coaches, referees and athletes;
• People registered in national credit protection registries.

Benefits of Brazil’s iGaming legislation changes

Changes in Brazilian sports betting legislation will bring several challenges, including ensuring security for users and adapting to the General Data Protection Law (LGPD).

However, they can bring benefits to both bettors and bookmakers and the Brazilian government. For instance:

• Legal security: bookmakers based abroad do not run the risk of being subject to sanctions for operating in Brazil, but not being physically present in the country.
• Revenue: with regulation, the Brazilian government will be able to collect taxes from the operations.
• Job creation: with the exponential growth of the industry, the trend for the future is the creation of thousands of jobs in the area.
• Reliability: with regulation, bettors tend to trust bookmakers more, which will have to implement mandatory security measures to prevent fraud and scams.
• Better identification of users: the trust of bookmakers in the bettors themselves will also increase, since they will go through identity validation processes.
• Reduced risk of crime: since the legislation now requires bookmakers to identify and validate the identity of users, and to implement security measures, the chances of identity fraud, money laundering, among other virtual crimes, decrease.

Market opportunity for sports betting houses

The biggest challenge for bookmakers in Brazil was trust in the sector. According to a study carried out by the Inter-American Development Bank (IDB) in 2022, Brazil was the country in Latin America and the Caribbean where people least trusted both other people and institutions. The distrust was even greater when it came to sports betting – a study carried out by Sportradar showed that Brazil was the world leader in the ranking of suspected fraud in sports betting that year.

However, with changes in legislation and regulation, trust in bookmakers should increase and the sector could grow even more. In 2020, the sports betting segment had a value of US$ 59.6 billion worldwide. The prediction is that, by 2027, this number will increase to US$ 127.3 billion.

Considering the fact that, with a population of over 215 million people, Brazil is the seventh most populous country on the planet, regulating sports betting opens up a huge market opportunity for bookmakers. It will only be important to follow the regulations, increase security and bet responsibly.