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Brazil inches closer to online gambling regulation following committee vote

TAGs: Brazil

brazil-gambling-billBrazil has taken another step towards launching a regulated online gambling market after a House of Representatives committee approved an amended version of the country’s proposed comprehensive gambling legislation.

On Wednesday, the Special Committee on National Development (CEDN) approved a raft of amendments that senators had proposed for SB 186/2014.

The bill envisions sweeping changes to Brazil’s gambling market, including the introduction of casinos, video lottery terminals and other options such as online sports betting, bingo and casino products.

CEDN had already approved the original version of SB 186/2014 in December, but senators subsequently proposed 16 amendments, five of which were added to the original text, including barring public officials and their relatives from involvement in gambling businesses and ensuring the suitability of would-be gambling licensees.

SB 186/2014 now also features defined tax rates for various gambling activities. Online gambling will be subject to a rate of 20% gross revenue, twice the sum applied to land-based operators. The bill justifies the higher rate by noting that brick-and-mortar operations impose much greater startup and maintenance costs, and thus online operators will have a more “significant” profit margin “and therefore higher ability to pay.”

There’s still no indication as to how many online licenses Brazil intends to issue, nor whether there will be any requirement for international operators to partner with a Brazilian entity, although companies will have to establish a local office. Brazil’s central bank will be tasked with blocking payments to and from unauthorized online operators.

There’s also no indication of gambling license fees or duration, although the bill states that land-based gambling licenses will be valid for a 30-year period. Violating license conditions will leave you liable for fines ranging from R10k to R100k (US $3k to $138k) per incident, while operating without a license can get you up to 12 months in jail.

Brick-and-mortar casinos are to be allowed only in “integrated leisure complexes, built specifically for this purpose” and the casino floor must not exceed 10% of the complex’s total footprint. The bill envisions up to 35 casinos, with each state allowed at least one and no more than three casinos. Companies are also limited to three casinos apiece.

The cash-strapped government estimates that it could earn annual tax revenue of R 15b ($4.15b) following the bill’s passage. The president of the Brazilian Institute of Gaming has estimated that up to 200k Brazilians travel out of the country each month in order to gamble and that 70% of the gamblers in Uruguayan casinos are Brazilian nationals.

It remains to be seen how the massive corruption scandal currently engulfing Brazil’s current and former presidents might affect chances of the bill’s passage or implementation. The full amended text of SB 186/2014 can be read here.

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