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Brazil's Journey Towards Regulated Sports Betting Reaches Crossroads Amid Legislative Uncertainty

The arduous path towards establishing a regulated sports betting framework in Brazil has entered a pivotal juncture, as mounting speculation surrounds the fate of President Luiz Inácio Lula da Silva's Provisional Measure (PM).

Brazil's Journey Towards Regulated Sports Betting Reaches Crossroads Amid Legislative Uncertainty

With the clock ticking on a 120-day deadline, concerns are rising that the National Congress may deny the required approval for the PM, a critical step in formalizing the 2018 Brazilian law governing the sports betting sector. This uncertainty has sent ripples through the industry, prompting a flurry of legislative activity.

Lawmakers have introduced a staggering total of 244 amendments to Provisional Measure (PM) No 1,182, reflecting the significance of this regulatory undertaking. Among these proposed amendments, a notable 57 have been put forth by senators, each seeking to influence the future landscape of sports betting in Brazil.

One of the core areas under scrutiny is the proposed tax rate, which has sparked a series of proposed adjustments. These proposed changes, while not yet etched in stone, represent potential shifts that could significantly impact the operational dynamics of the sports betting market. In addition, new advertising restrictions are on the table, adding another layer of complexity to the regulatory deliberations.

While these amendments are still subject to Congressional approval to transform into legal provisions, they underscore the profound implications of this regulatory overhaul. The initial reception of the PM within the industry was marked by skepticism, as stakeholders voiced concerns about the high tax rate, potential payment challenges, and uncertainties tied to regulatory framework.

President Lula da Silva's issuance of the PM in July marked a milestone in the protracted journey to regulate sports betting in Brazil. However, this step was far from the final one, as the measure necessitates the green light from the National Congress within the stipulated 120-day window. This timeline is now a pressure point, accentuated by growing rumors that the legislative body may ultimately reject the PM. Such a move would reverberate as a significant setback in a process that has already been characterized by twists and turns.

Neil Montgomery, Founder and Managing Partner of Montgomery & Associados, a prominent Brazilian law firm, shed light on the evolving dynamics. Montgomery noted a prevailing sentiment that Congress has played a secondary role, overshadowed by the executive's actions. He emphasized the pivotal nature of the upcoming months, projecting that the actualization of a regulated sports betting market might not be realized by Brazilians until 2024 at the earliest. This timeline accounts for the subsequent administrative steps required even after Congress' decision.

Amid the landscape of proposed amendments, the issue of tax rates emerged as a focal point. While the initial 18% tax rate introduced by the PM was already higher than industry expectations, many of the proposed amendments sought to amplify the tax burden. Notably, Teresa Leitão, a PT senator representing the state of Pernambuco, advocated for increasing the tax on operators to 22%. Leitão argued for a shift in the allocation of sports betting revenue to bolster basic education, in contrast to the original distribution plan.

However, amidst the tide of amendments driving for higher taxation, there were also voices advocating for a different approach. MDB deputy Newton Cardoso Jr. proposed an amendment that sought to reduce the sports betting tax to a more moderate 11%. Cardoso's rationale was rooted in the concern that an exorbitant tax rate could undermine the viability of the nascent Brazilian market. Drawing parallels with the British system, Cardoso highlighted the 15% GGR tax employed in the UK, a benchmark that Brazil could aspire to emulate.

In tandem with the tax-related debates, the realm of advertising regulations came to the fore. The issue of gambling advertising has been a subject of global discussion, and Brazil was no exception. Senators presented diverse visions of how to approach this sensitive matter, with various proposals seeking to curtail the visibility of sports betting advertising across multiple media platforms.

Among these, Senator Eduardo Girão submitted a comprehensive proposal advocating for a sweeping ban on sports betting advertising. His ambitious vision encompassed a prohibition on all forms of sports betting promotion, spanning newspapers, television, radio, social media, and even sports venues. This far-reaching proposal also extended to player kits and online portals, aiming to create a comprehensive framework to address concerns about the influence of gambling advertising on society.

As Brazil stands at this critical juncture, the outcome of these legislative deliberations is poised to reshape the trajectory of the sports betting industry within the country. The decisions made in the coming months will not only impact the operational landscape for operators and stakeholders but will also have wider economic and social ramifications. The intricacies of this process highlight the intricate interplay between regulatory considerations, economic viability, and societal concerns, as Brazil navigates the intricate path towards a regulated sports betting ecosystem.



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