BUSINESS

Brazil legislators offer more tweaks to proposed gambling law

TAGs: Brazil

brazil-gambling-law-revisionsBrazil is mulling further revisions to its proposed gambling law, including requiring online gambling operators to partner with local firms.

This week, the special committee headed by Senator Fernando Bezerra Coelho delivered its report on the country’s SB 186/2014 legislation, which aims to liberalize the country’s land-based and online gambling markets.

Coelho’s report would allow brick-and-mortar casinos, bingo, sports betting, online gambling, federal and state lotteries, sweepstakes and the ‘jogo de bicho’ numbers game. The report makes no mention of slot machines or video lottery terminals.

The report calls for gambling concessions to be either awarded to subsidiaries of the Caixa Federal Bank – which already runs the Lotex instant lottery scratch card business – or auctioned off to the highest bidder, with the bulk of the fees generated by these auctions used to help fund Social Security. Opinions are already being voiced that this winner-takes-all stance favors better-capitalized international operators over domestic firms.

However, gambling concessions will be reserved for entities “duly constituted under Brazilian law, with headquarters and management in Brazil.” Concession duration will depend on the form of gambling, with the maximum initial term set at 20 years.

The report calls for a variable monthly “inspection fee” based on the value of “monthly awards” paid to winning bettors. If monthly awards total BRL 50m (US $15.9m) or less, then the fee will be BRL 259k ($82.5k), or roughly 0.5%. At the other end of the scale, if monthly awards exceed BRL 400m ($127.5m), the fee tops out at $1.3m (1%).

Players’ gambling winnings will be subject to a 30% withholding tax, a requirement that critics believe will only serve to push Brazilian punters toward sites not holding a Brazilian license. Operators who do offer gambling to Brazilians without a local license can face fines and prison stints of one to five years.

There is a competing gambling bill in Brazil’s Chamber of Representatives, which takes a far dimmer view of online gambling. The country’s interim president has also publicly suggested that online sports betting should be a state-run monopoly coupled with an experienced international partner.

The current plan is for legislators to figure out a way to resolve the competing plans and then vote on whatever consensus emerges. However, this may not occur until September, as the current legislative priority is sorting out the impeachment of former President Dilma Rouseff.

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