On September 13th, the House of Representatives approved Bill No. 3,626/2023, which establishes regulations for the Betting Law. In accordance with the Bill, betting companies that satisfy the legal requirements and are deemed eligible by the Ministry of Finance are obliged to submit a payment of BRL 30,000,000.00 (thirty million Brazilian Reais) to acquire a three-year authorization of operation. The precise payment method for this amount has not yet been specified by the Ministry of Finance.
To qualify for authorization from the Ministry of Finance, companies must, among other requirements, adhere to Brazilian legal incorporation standards and have their headquarters and management based within the national territory. Currently, the ten companies sponsoring Brazil’s top football teams have their headquarters in offshore tax havens.
With this legislation, companies engaged in betting activities in Brazil will need to meet a series of criteria outlined by the Ministry of Finance to be eligible for authorization, including the payment requirement.
Eligible companies must demonstrate their sector-specific expertise, appoint a director responsible for liaising with the Ministry of Finance, implement a robust cybersecurity system, and establish connections or affiliations with national or international organizations overseeing sports integrity.
The Ministry of Finance will only grant operating permits to companies that meet all legal requirements and pass an evaluation of their technical and financial capabilities, as well as an assessment of the reputation and competence of their owners and administrators.
Companies that continue to engage in betting activities without the necessary authorization from the Ministry of Finance, or that commit violations specified in the Bill, may face various penalties, including fines of up to BRL 2,000,000,000.00 (two billion Brazilian Reais), suspension of their activities for a maximum of 180 days, a ban on applying for new operating permits for up to 10 years, and disqualification of directors or administrators from participating in the industry for as long as 20 years.
To facilitate oversight carried out by the Ministry of Finance, betting companies will be obligated to provide unrestricted, continuous, real-time access to their systems for the examination of technical, operational, economic, financial, and accounting data, as well as documents and reports. These oversight procedures may last for a maximum of 5 years, as determined necessary by the Ministry of Finance.
Furthermore, the Ministry of Finance will have the authority to mandate the deactivation of betting operation systems, suspension of prize payouts, and the collection of issued tickets if indications of irregularities are found before or during an administrative process. Companies and their directors failing to adhere to the directives of the Ministry of Finance will be subject to daily fines ranging from BRL 10,000.00 to BRL 200,000.00.
In cases of suspected result manipulation or similar fraudulent activities, the Ministry of Finance may immediately suspend and prohibit bets placed by companies, with the withholding of prize payouts related to the suspicious event. Companies and their directors not complying with these directives will also face daily fines ranging from BRL 10,000.00 to BRL 200,000.00.
Under the provisions of the Bill, companies will be subject to a tax rate of 18% on their Gross Gaming Revenue (GGR), with prizes exceeding BRL 2,112.00 taxed at a rate of 30%. Prize payments must be processed through financial institutions authorized by the Central Bank of Brazil. In cases where prizes remain unclaimed for 90 days, 50% of the funds will be allocated to FIES (Student Finance Fund), and the remaining 50% to FUNCAP (National Fund for Public Disasters, Protection and Civil Defense).
C0autoria de: Cássia Monteiro, Luca Paulos Guarnieri e Nathália Fernandes Gonçalves
