Introduction to Brazil’s New Betting Law

In a significant regulatory overhaul, Brazil has implemented a new law that introduces a 15% tax on winnings from sports betting and online gambling. This tax applies to winnings that exceed R$2,112 (about $423). The legislation, signed by President Luiz Inácio
Lula da Silva under Bill PL3626/23, marks a pivotal step in regulating the sports betting sector to boost state revenues.

Overview of the New Tax Structure

The new legal framework mandates a 12% tax on revenues for licensed operators, while bettors will face a 15% tax on their winnings above the specified threshold. To operate legally, businesses need to secure a federal license, valid for five years, at a cost
of BRL 30 million (approximately $6 million), allowing them to manage up to three brands.

Allocation of Revenue

The generated revenue from this new regime is earmarked for various public sectors:

  • Sports Ministries and Committees: 36%
  • Tourism: 28%
  • Public Safety: 13.6%
  • Education and Social Security: 10% each
  • The remainder will support health, civil society entities, the Police Federal Equipment and Operation Fund, and the Brazilian Agency for Industrial Development.

Impact on the Betting Industry

This regulatory clarity is expected to attract significant interest from major global sportsbooks. However, the high tax rate might influence how much these companies are willing to spend on marketing and sponsorships within Brazil. Analysts predict that the
approval of this sports betting bill will earn the federal government over R$3bn (US$610m) per year in taxes alone

Conclusion

The new sports betting law in Brazil represents a major step towards a regulated and transparent betting industry. It is anticipated to bring substantial revenue to the government while creating a more structured environment for operators and bettors alike.