Brazil a Step Closer Towards Regulating Online Gambling

Brazil is now a step closer towards online gambling regulation after the House of Representatives committee agreed on the amended version of the proposed gambling legalization in the country.

Last week the Special Committee on National Development or the CEDN gave thumbs up to set of amendments the senators had proposed for the bill SB 186/2014.

Some of the big changes envisioned by the bill include the introduction of casinos in the Brazilian gambling market, terminals for video lottery and other propositions such as betting on sports online and introducing casino and bingo content.

Bill’s Provisions

Those familiar with the subject perhaps recall that the bill addresses big changes to the gambling laws in Brazil related to legalizing and regulating land based and online sports betting and casinos. Last December, the SB 186/2014 was approved by the Special Committee on National Development, however, it underwent further debate and 16 new amendments to it were introduced last week.

Five of them were added to the original bill including restricting public officials and their relatives from taking part in gambling and ensuring the suitability of the gambling licensees.

According to the amendments, the bill now includes defined tax rates for different gambling activities. The gross revenue of online gambling is going to be a subject to 20% rate, twice the amount applied to brick and mortar operators. The reason for this is because land based casino operations have much higher costs related to startup and maintenance, therefore, online operators have more profit and bigger ability to pay.

As of this writing, there is no information on how many licenses the Brazilian government is going to issue or whether offshore operators must partner with a local entity to be able to offer gambling services, but operators will have to establish an office in Brazil. The local central bank will be responsible for blocking payments from unlicensed online gambling sites.

Furthermore, land based gambling licenses will be valid for a period of 30 years. In case of any violations, operators must pay fines ranging from R10k to R100k or $3k to $138k per violation, while if a company offers gaming services without a license, it might get up to 12 months in jail.

Last but not least, land based casinos are allowed only in integrated resorts and the casino sector must not go over 10% of the entire footprint of the complex. Also, there will be up to 35 casinos and each state is allowed to have between one and three casinos. Operators are also limited to operating three casinos apiece.

Estimations

The government estimates that it could generate tax revenue of R 15bilion or $4.15 billion on a yearly basis after the bill is passed into law. The CEO of the Brazilian Institute of Gaming estimates that up to 200k Brazilians will take part in gambling and that 70% of the players in casinos in Uruguay will be Brazilian nationals. It’s up to be seen whether the current corruption scandal in the country will affect the passage of the bill.