Bill No. 3,626/2023 amending sports betting legislation has been approved

Several changes were made in the Brazilian legislation on sports betting (fixed-odds betting) after the approval of Bill of Law (PL) No. 3,626/2023.

SãO PAULO, SãO PAULO, BRAZIL, December 26, 2023 /EINPresswire.com/ -- Online games

Congress has included online games in the concept of fixed-odds lotteries, applying the same rules as sports betting.

Taxation on GGR

Operators can appropriate 88% of the Gross Gaming Revenue (GGR). The Government will retain the remaining 12% for various destinations (education, social security, sports, tourism, and public security).

Taxation on the prizes

Bettors must pay 15% as Individual Income Tax on the net prizes received, calculated annually from the positive result obtained each year, after deducting losses incurred in the same period. The same rule applies to fantasy sports.

Provisions on the legal nature and related to the partners and shareholders of the operators

Authorized companies must meet the following conditions:

1. Be incorporated in Brazil, with headquarters and administration in the country and subject to Brazilian laws;

2. Have a Brazilian partner with at least 20% of the share capital;

3. Partners and controlling shareholders (individually or part of the control block) may not hold a direct or indirect interest in a Football Corporation or professional sports organization nor act as a director of a Brazilian sports team.

**The House of Representatives overturned the restriction brought by the Senate, which prevented the operator's controlling partner or shareholder from having a direct or indirect stake in financial and payment institutions that process fixed-odds bets.

Requirements for authorization

In addition to the requirements on the legal nature and related to partners and shareholders, operators who want to apply for authorization must meet the criteria below, which will be specified in the regulations to be issued by the Ministry of Finance (part of this regulation was provided by Normative Ordinance No. 1,330/2023, of the Ministry of Finance):

1. Minimum amount and form of payment of the share capital;

2. Proof of knowledge and experience in games, betting, or lotteries, and any affiliated company may carry out;

3. Requirements for management positions;

4. Designation of the director responsible for the relationship with the Ministry of Finance;

5. Designation of a director responsible for customer service and ombudsman;

6. Technical cybersecurity requirements of operators' IT infrastructure, with nationally or internationally recognized certification requirements;

7. Operators must be associates of national or international sports integrity monitoring bodies.

Cost and validity of the permit

The authorization fees are of R$ 30 million. The authorization will be valid for five years, allowing the company to operate three trademarks that it can exploit in its electronic channels (website, app).

Players forbidden to place bets:

a. A person diagnosed with ludopathy, according to a report by a qualified mental health professional;

b. A person under 18 years of age;

c. Owners, officers, directors, managers, employees, or persons with noteworthy influence on the operators;

d. Public agents with duties directly related to the regulation, control, and inspection of the activity;

f. Those who have or may have access to the computerized lottery systems;

g. Those who have or may have any influence on the result of an actual sports-themed event, including sports managers, coaches or members of technical committees, referees and assistants, sports entrepreneurs, agents or attorneys of athletes and coaches, members of management or supervisory bodies of the organizing entity of a competition or sports event;

h. The athletes participating in competitions organized by entities of the Brazilian National Sports System.

** The prohibition extends to spouses, partners, and relatives in a direct and collateral line, up to the second degree, of the ones prohibited from placing bets.

** Bets placed by such persons will be null.

Advertising

It is forbidden advertisement that contains the following:

1. Disclosing unauthorized operators by the law;

2. Conveying unsubstantiated claims about the likelihood of winning;

3. Presenting betting as socially appealing;

4. Statements by well-known personalities or celebrities that suggest that gambling contributes to personal or social success;

5. Suggestions that gambling can replace employment, i.e., the solution to financial problems;

6. The Ministry of Finance may notify advertising companies, including internet application providers, to exclude irregular campaigns.

Advertising must aim at an adult audience, avoiding targeting children and adolescents.

The Ministry of Finance will issue specific regulations on advertising, and self-regulation will also be encouraged.

Payment methods

Only Brazilian institutions authorized to operate by the Central Bank of Brazil (BACEN) can offer transactional accounts or services that allow the placement and payment of bets.

Institutors of payment arrangements and financial institutions will only be able to allow transactions for operators who have authorization issued by the Ministry of Finance.

The above prohibition only begins after a minimum period of 90 days after the regulation.

Fraud prevention and match fixing

Operators must adopt procedures for identifying bettors, including identification/facial recognition technology.

Bets placed to advantage or gain from match-fixing are null and may have their payouts suspended.

Next steps

The Ministry of Finance should edit the pending regulation, especially regarding the process details for requesting and granting the bid.

In the regulation, the Ministry must grant companies at least 180 days to promote the necessary adjustments.

Natália Zulzke de Carvalho
TozziniFreire Advogados
+55 11 5086-5000
email us here
Visit us on social media:
Facebook
Twitter
LinkedIn
Instagram
YouTube
Other