Lula Approves Landmark Sports Betting Legislation in Brazil, Paving the Way for a Thriving Federal Marketplace!

Lula's endorsement on Saturday, December 30, finalizes the legislative process, avoiding a repeat of the 2022 deadlock when former President Jair Bolsonaro withheld federal approval for sports betting. The Workers’ Party (PT) government revisited and revised Bill PL3626/23, which underwent federal evaluation by Brazil’s Senate Committees in September. Over 100 amendments were made to secure federal approval for the bill during this evaluation process.

Despite the amendments, disputes lingered over the authorization of online casino operations, particularly contested by Senators from the Liberal Party. This led to the bill being returned to the Chamber of Deputies for a decisive vote on the remaining amendments, creating uncertainty about its legislative future.

In the final session on December 22, 261 members of the Chamber of Deputies voted in favor of the bill, with 120 against, endorsing the legislative framework for online casino games.

As officially published in a special edition of the government’s ‘Diário Oficial da União’ on December 30, Lula has now signed Bill PL3626/23 into law. This move introduces a new regulatory regime for sports betting, commonly known as ‘Bets.’

The federal framework aligns with the PT government’s goal of enhancing state revenues, with projections suggesting a regulated sports betting market could generate at least R$ 10 billion for public services.

However, during the federal endorsement, Lula imposed vetoes on ‘certain aspects’ of the bill, notably the tax exemption for betting prizes up to R$ 2,112 (€450). This decision, recommended by the Ministry of Finance, is based on the principle of ‘tax equality’ as Brazil’s sports betting market evolves.

These presidential tax vetoes are now subject to further examination by the National Congress, where they can be sustained or overruled.

The Senate’s Economic Affairs Commission (CAE) proposals for fiscal and tax structures remain intact. Licensed operators in Brazil’s federal market will face a 12% tax, while player prizes will be taxed at 15%.

To obtain a federal license valid for five years, businesses must pay BRL 30 million (approximately €5.5 million). This license allows the operation of up to three brands, and eligibility is restricted to firms incorporated under Brazilian law with headquarters in the country, requiring the appointment of a legal guardian domiciled in Brazil.

Revenue from the Bets regime will be allocated to various sectors: 36% to sports ministries and committees, 28% to tourism, 13.6% to public safety, and 10% each to education and social security. Health will receive 1%, civil society entities 0.5%, the Police Federal Equipment and Operation Fund 0.5%, and the Brazilian Agency for Industrial Development 0.4%.

Looking ahead to 2024, the Ministry of Finance will publish regulations to initiate Brazil’s federal sports betting market. Crucial responsibilities include establishing a ‘dedicated market supervisor’ to oversee standards, conduct, and consumer protection in Brazil’s new gambling sector.

Before Lula’s authorization, the Ministry reported that 134 businesses had expressed interest in joining Brazil’s impending online gambling market by submitting their pre-market ordinance measures.