The recent regulation of fixed-odds betting in Brazil marked an important milestone for iGaming in the country. With exponential growth in recent years, mainly driven by the expansion of digital platforms, the measure was inevitable. In this article for GMB, 1win Partners explores the changes brought about, the influence on the financial market and economy, and discusses the impact of the law on the job market.
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Context and growth of the betting market
In recent years, the betting market in Brazil has experienced remarkable growth. According to recent estimates, about 18.7% of the population aged 18+ has bet or bets in some area, whether it be sports, online casinos, or other modalities. This percentage reflects a global trend, where digital entertainment, including betting, becomes increasingly popular and accessible.
With the increase in popularity, there was also a growing need for robust regulation. Before the new legislation, the Brazilian betting market operated in a sort of "gray zone," without clear rules that protected consumers or regulated the actions of companies. This led to a scenario of legal and fiscal uncertainty.
Main changes
The new fixed-odds betting law came to fill this gap, introducing a series of rules aimed at regulating the sector. Some of them include:
1. Taxation: The law establishes a taxation of 15% on the net value of the prizes obtained by bettors. This taxation aims to increase government revenue, which had already estimated a significant loss of revenue due to the lack of previous regulation. It is worth noting that the taxation works on the same principle as income tax, with those who obtain gains smaller than R$ 2,259.20 from the net prize, i.e., the difference between the amount bet and the amount won, being exempt from the tax.
2. Destination of revenues: A significant part of the revenues collected from taxation will be allocated to essential areas, such as education (10%), public security (13.60%), sports (36%), and tourism (28%). In addition, 50% of unclaimed prizes will be allocated to FIES (Student Financing Fund) and 50% to FUNCAP (National Fund for the Development of Science and Technology), although it is not clear how long the amount can stay on the platform before being allocated to the funds.
3. Regulation of operators: Betting operators, whether national or international, now need to meet strict requirements set by the Ministry of Finance to operate in Brazil. This includes proving financial capacity, maintaining a customer service channel, and complying with advertising rules aimed at preventing abusive practices.
Impact on the financial market
The regulation of betting has a direct impact on the financial market and the economy. The formalization of this sector attracted significant investments, both from already established companies and new entrants to the market. The estimate is that the betting market could move about R$ 20 billion annually in the coming years, a substantial amount with the potential to transform entire sectors of the economy.
In addition to the increase in tax revenue, the regulation is also creating new job opportunities. With the need for operators to comply with local regulations, companies are expanding their operations in Brazil, creating vacancies in areas such as technology, customer service, marketing, and compliance. The estimate is that the sector could generate tens of thousands of new direct and indirect jobs, especially in regions that historically face economic challenges.
Challenges and future perspectives
Although the regulation is a positive step, there are still challenges to be faced.
One point of debate is the social impact of betting. The law provides for allocations of part of the revenues to programs for the prevention and treatment of gambling addiction, but the effectiveness of these measures will still need to be evaluated over time.
However, the prospects are promising. With the regulation, Brazil aligns with countries that have already regulated the sector and reap the benefits of this formalization, such as increased tax revenue, job creation, and consumer protection. The success of the law will depend on its rigorous application and the government's ability to keep up with the technological innovations that shape the betting market.
Conclusion
The new fixed-odds betting law in Brazil represents a significant transformation for the sector, bringing clarity and security for both companies and consumers. With the potential to move billions of reais and generate thousands of jobs, the regulation of the betting sector is an example of how legislation can be used to transform and energize the economy. However, for these benefits to be fully realized, a continuous effort in education and innovation in monitoring the sector will be essential.
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Source: 1win Partners
