The Brazilian federal government published the long-awaited Provisional Measure No. 1,182, of July 24, 2023, which brings substantial changes to Law No. 13,756/2018, advancing the regulation for the sports betting sector in the country.

Provisional measures (MPs) are acts issued by the President of the Republic with the force of law, but of a temporary nature.

According to the procedure established by Constitutional Amendment No. 32, MPs are effective immediately, from the moment of their publication.

The MPs are then submitted for analysis by the National Congress, which must convert them into law within a period of sixty days , extendable once for the same period, under the risk of losing their validity.

Therefore, it is likely that MP No. 1,182, with the changes proposed by the Legislative Branch, will be converted into law by the end of this year.

From a tax perspective, according to the MP, these companies will be taxed at 18% on “Gross Gaming Revenue” (GGR), which represents the revenue obtained from all games after paying prizes to players and income tax (IR) on prizes.

With this taxation, “bets” keep 82% of the revenue to conduct their operations.

Furthermore, the MP establishes that the fixed-odds lottery (a type of game in which participants, at the time of betting, know the value of any prize) will be granted, permitted or authorized, on a onerous basis (i.e., its operation will be subject to the taxation mentioned above), by the Ministry of Finance.

The fixed-quota lottery modality will be operated exclusively in a competitive environment, without restrictions on the number of authorizations, and may be marketed through various distribution channels, whether physical or virtual.

Main prerequisites have been released

In order to operate lawfully in the country, operators must acquire government authorization and comply with the rules established in the Provisional Measure and in the Ordinance that will regulate it.

The exploration of “bets” may be carried out by national or foreign legal entities, as long as they are duly established in national territory, registered with the competent bodies and in line with national legal obligations (tax and labor).

The MP, however, does not cover all regulatory areas of the betting market.

As the Federal Government itself has already stated, some Ordinances will still be issued to regulate the activity more effectively.

The Ordinances must cover some relevant issues, for example, the prevention of match manipulation, the implementation of transfers, advertising and marketing actions and the monitoring of operations.

However, still within the scope of the regulation aimed at operators already published, the MP provides, mainly:

• The prohibition of making bets available on championships with exclusive participation of athletes under 18 years of age;
• The possibility of the Ministry of Finance suspending or prohibiting certain types of betting that do not involve predicting results.
• The prohibition of operators acquiring broadcasting rights for sporting events or making sounds and images of matches available on their websites;
• The prohibition of sponsorship by unlicensed companies, with the possibility of notification by the Ministry of Finance so that sponsored companies remove advertisements from unlicensed companies;
• The possibility of the Ministry of Finance notifying providers to block access to unlicensed websites.

It is important to highlight that, despite the immediate effectiveness of the MP, the prohibitions and restrictions mentioned above, according to art. 3 of MP nº 1.182, will only produce effects “from the effective date of the regulation of the Ministry of Finance that allows interested parties to submit a request for authorization to the Ministry of Finance”.

In other words, the Ministry of Finance must soon present administrative regulations, covering, among other topics, the procedure for obtaining the authorization so that “bets” can operate.

Upon obtaining said authorization, licensed “bets” will be subject to the restrictions described above.

In order to force companies to operate within the law, sports administration entities (such as the CBF, for example) must, based on the new legislative text, mandatorily include in their regulations the prohibition of sponsorship by unlicensed “bets”.

Furthermore, the Central Bank of Brazil must regulate arrangements to prevent illegal payments in bets and internet providers will be obliged to block access to non-licensed websites.

Regarding the integrity of the sport, it is important to highlight that the Provisional Measure prohibits the possibility of a partner or controlling shareholder of a betting company from participating in a Football Corporation (SAF) or even acting as a manager of a sports team.

MP restricts groups that could contribute to manipulation

With the amendment to Law No. 13,756/18 based on the text of the Provisional Measure, in order to protect sporting unpredictability, people who fall into the following categories are prohibited from betting:

• Public agents who work to supervise the sector at a federal level;
• Under 18 years of age;
• Persons with access to computerized fixed-odds lottery betting systems;
• Registered in national credit protection registries;
• Individuals with potential influence on the results of games, namely, managers, coaches, assistant coaches, referees and referee assistants, businessmen and agents, members of the administrative or supervisory bodies of federations and confederations, and, notably, athletes.

The ban also extends to spouses and relatives up to the second degree of public agents responsible for supervising sports betting, people with access to betting systems and other actors who can influence the results of games (managers, coaches, referees, athletes, etc.).

Still with regard to integrity, the Provisional Measure also requires that companies in the betting market invest in mechanisms to prevent the manipulation of results.

Furthermore, operators are responsible for raising awareness among gamblers about the risks and addiction to gambling, based on the regulation of these marketing actions by the Ministry of Finance and CONAR.

On the part of the State, the Provisional Measure enables the creation of a national body to monitor sporting integrity.

Companies that operate bets without authorization from the Ministry of Finance or that offer services in violation of the law (again, after the Ministry of Finance’s regulation that allows interested companies to request authorization comes into effect) will be subject to fines ranging from 0.1% to 20% of the company’s revenue, with a limit of R$2 billion per violation.

The operating license may also be revoked, and the company’s activities suspended. (Mariana Chamelette)

Finally, with regard to transfers, the money raised through taxation will be allocated to social security, the Ministry of Sports, entities of the National Sports System, and Brazilian athletes and teams that provide their names, nicknames, images, brands, emblems and similar for publicity.

Thus, Provisional Measure No. 1,182 represents an important milestone in the regulation of sports betting in Brazil.

With the intention of boosting the sports sector and increasing the country’s revenue, this measure brings new rules for betting companies and imposes restrictions on participation in bets.

It is undeniable that the regulation of sports betting is an important step towards a more transparent and safe market for everyone involved.

It will now be up to the Ministry of Finance to regulate the procedure for granting “bets” and, mainly, to the National Congress to analyze and improve the legislation proposed by the government, aiming to achieve a balance between the development of the sector and the protection of consumers. The…