Sports betting is now regulated in Brazil

On December 30, 2023, the President of Brazil approved, with vetoes, Bill Nº. 3,626/23 (Law No. 14,790/23, which enters into force on the date of its publication in the Official Gazette of the Union) that aims to regulate the online betting market and establishes the taxation of non-sports online games, such as casinos.

Under the approved text, companies operating these games will be taxed at a rate of 12% (twelve percent) of Corporate Income Tax (IRPJ), while for bettors, a charge of 15% (fifteen percent) is established as a title of Individual Income Tax (IRPF), on the net value of gains from the bets. The Federal Government’s expectation is to collect at least R$ 10 billion for public coffers already in 2024. Among the vetoes, the President vetoed the tax exemption for gains below the first bracket of the Individual Income Tax table, which today is equivalent to R$2,112.00.

The law also stipulates that companies wishing to operate online betting, whether sports-related or not, will require authorization from the Ministry of Finance. Additionally, these companies must be established in Brazil and have at least one Brazilian holding a minimum of 20% (twenty percent) of the company’s capital in their corporate structure.

In addition, the new law requires operators to verify the identity of bettors using facial recognition, in order to identify fraud, potential harm, or abusive use of the platforms. It also establishes that bets investigated for manipulation of results will have their payment suspended until the end of the investigation.

In regard to advertising, the new law establishes that the communication, advertising, and marketing actions of fixed-odds betting lotteries will also depend on regulation by the Ministry of Finance, with self-regulation being encouraged.

Without prejudice to subsequent regulation by the Ministry of Finance, the new law prohibits the fixed-odds betting operator from broadcasting certain types of advertising, including advertising that makes unfounded claims about the probability of winnings from bets, as well as advertising that presents bets as socially appealing.

It’s noteworthy that in the same week the new law was approved, the National Council for Advertising Self-Regulation (CONAR) published specific rules applicable to betting advertising, now formally incorporated into its Code of Ethics, under the scope of Special Categories of Advertisements (Annex X). Among the specific requirements applicable to the industry, the demand for verifying the ownership of betting houses’ profiles on social networks and websites stands out, along with the necessity for individuals prominently featured in betting advertisements to be, and appear to be, over 21 years old.

Our team is monitoring all developments on this matter. If you would like to obtain more information on the subject, we are available via e-mail at felipe.monteiro@kasznarleonardos.com and fernanda.magalhaes@kasznarleonardos.com.