Bill regulating Legal Gambling Framework approved in Brazil’s House of Representatives
Senate must debate and approve bill before it can be sent for presidential sanction
After more than 30 years of discussion and a series of modifications, a bill that would permit and regulate gambling in Brazil was finally approved by the House of Representatives on February 24, 2022.
First presented in 1991, Bill No. 442/1991 initially only sought to regulate a popular Brazilian game known as jogo do bicho. Since then, it has been modified in the House of Representatives on numerous occasions to include rules and conditions for operating casinos, bingo and slot machines, as well as bets on horseracing and online gambling in Brazil. Sports betting was not included in the final version and would be regulated by a decree from the Executive Branch if the bill becomes law.
The bill also provides for a federal regulatory and supervisory body with jurisdiction over the gambling industry, establishes minimum requirements for companies that intend to run legal gambling businesses, creates guarantees for people who gamble and mechanisms to prevent them falling into debt, and establishes taxes on gambling revenue.
The main provisions of the bill are outlined below:
• Regulated games: casino games, bingo, slot machines, online games, bets on horseracing and jogo do bicho;
• Regulatory Agency: the bill authorizes the Executive Branch to create a federal regulatory body for the sector;
• Gaming licenses: the regulatory body must grant gaming and betting companies a license to legally operate. Only Brazil-based companies incorporated under Brazilian law in sociedades anônimas (a type of limited company) may apply for a license. Moreover, granting a license would require compliance with several conditions set forth in the law, as well as regulations the federal regulatory body would enact. These conditions include verifying the controlling shareholders’ economic and financial capacity, minimum capital, the origin of the funds used to pay up the capital stock, whether the technological infrastructure is compatible with the inherent complexity and risks involved in gambling, the reputation of the controlling shareholders and qualifying shareholders. Both physical and virtual gambling establishments must also be registered with the regulatory body;
• Responsible gambling: the bill provides for creating an integrated system with a list of people (problem gamblers) restricted from accessing physical gambling establishments and online games;
• Operating casinos: casinos would have to be installed in integrated leisure complexes built specifically for this purpose. Casino accreditation would be granted for a fixed 30-year term, renewable for an equal period. The bill also includes a limit on the number of licenses, tied to the size of Brazil’s population;
• Online games: the bill provides for the possibility of the regulatory body licensing games of chance involving online betting, whether via the internet, mobile telephones, mobile computing devices, or any other authorized digital communication channels;
• Liability: Brazil-based internet service providers would be prohibited from enabling access to websites that are not registered with the regulatory body. In the same vein, online application providers would not be allowed to offer unregistered games and bets via their apps, whether free of charge or otherwise;
• Advertising: the bill bans advertising by companies that are not authorized to operate by the regulatory body;
• Specific taxes: the bill creates the Gaming and Betting Inspection Fee (Tajifa) to cover the federal regulatory body’s costs for inspections, which it would have the power to carry out. Licensed operators would have to pay up to BRL 600,000 per licensed establishment/entity each quarter, depending on the gambling-related activities they carry out. Moreover, a tax levied on gross revenue from games and bets (Cide-Jogos) would also be established for the games provided for in the law. The tax rate would be 17%, with gross revenue defined as the difference between the sums of money bet and the value of the prizes paid out;
• Tax on prizes: When sums equal or greater to BRL 10,000 are paid out as ‘net prizes’, gaming and betting companies would be required to withhold 20% of the amount paid to the player as income tax. A net prize is defined as the difference between the sum paid out and the total value of the bets made in the 24 hours prior by the same bettor, in the event of a positive result.
• Revoked misdemeanors: the bill would revoke certain misdemeanor crimes concerning gambling and jogo do bicho provided for in the Criminal Misdemeanors Act (Decree-Law No. 3,688/1941). If the Senate approves the bill’s current wording, those already accused of illegal gambling via the newly legalized forms would no longer be liable for prosecution, and any related lawsuits would be dismissed;
• Gambling-related crimes: if the bill is approved, it will become a crime to conduct any form of gambling in violation of the law; rig game results or make fraudulent bets; allow minors under the age of eighteen to gamble or enter spaces intended for gambling; allow or authorize financial transactions via credit card, loans or financing with foreign companies or websites that conduct gaming activities; obstruct or hinder inspections by the public authorities.
The bill will now be sent to the Senate. Should the Senate make substantial changes to the wording, the bill will have to be sent back to the House of Representatives, which may or may not accept the proposed suggestions.
On the other hand, if the Senate directly approves the bill, it will be sent on to the President’s office, who will then have 15 days to sanction and/or veto it.
For further information on this topic, please contact Mattos Filho’s Intellectual Property and Entertainment Law practice areas.