New entry barrier for companies will take effect from 2025 and will act as a sieve to remove companies from the game. According to experts, the expectation is that the market will professionalize like never before and that the legislation will unlock money for mergers and acquisitions and for venture capital investments. Special report by Estadão.
Starting next year, betting companies will need to pay for a license to operate online betting and gaming businesses in the country. The fee is R$ 30 million and allows the market to be explored for five years, with up to three different brands per company.
The measure is part of comprehensive legislation, inspired by international models, which aims to regulate the sector so that it continues to exist, generates jobs in the country, and captures resources for the government.
Considering the just over 100 companies already registered, with the payment of the R$ 30 million grant for the exploration of the betting market in the country, the government will collect, from 2025, an estimated amount of more than R$ 3 billion.
According to experts, the charge will take significant revenue from the bets that today goes both to the pockets of entrepreneurs and to marketing investments. Moreover, the law may create a large sieve in the sector, leaving only a few companies operating in Brazil.
The expectation is that the market will professionalize like never before and that the legislation will unlock money for mergers and acquisitions and for venture capital investments.
The new law also provides for a fine of up to R$ 2 billion for companies that exploit the Brazilian online betting market without the proper payment of the grant to the government.
The financial entry barrier to the national market was imposed by the Secretariat of Prizes and Bets of the Ministry of Finance in May of this year. Companies have until December 31, 2024, to comply with the new rules. It will also be necessary to have R$ 5 million in guarantee cash.
With the payment of the grant, companies can operate both in sports betting and online games, including roulette, casino, poker, and others. That is, games like Fortune Tiger (“Little Tiger Game”) will also need to pay for the license or may leave the country.
From an economic point of view, entrepreneurs in the sector say it does not make sense to stop operating in all possible ways to make the operation viable, especially with the taxation of 12%, excluding state taxes.
In the estimate of the online traffic company SEMRush, bet365, Betano, and Betfair are currently the companies with the highest audience numbers, thus being the favorites of the players.
On average per month over the last 12 months, betting sites had 194.2 million visits. Brazil is among those with the highest number of audiences on these platforms, despite not yet being among the largest in revenue.
The taxation of betting houses is a strategy of Minister of Finance, Fernando Haddad, to increase fiscal revenue, with the collection of taxes and the grant. The government's estimate is that revenue from the new legislation will be between R$ 12 billion and R$ 15 billion per year.
Limitation of studies
In the view of Magnho José, president of the Legal Game Institute, which represents the sector, the Brazilian betting market reached its current stage due to the lack of regulation in the initially planned period. In the government proposal of Michel Temer, the sector should have been regulated within two years, with a deadline extendable for another two.
With this postponement, the sector went four years without clear rules. For José, the delay occurred due to the religious bench of the Chamber. “He (Bolsonaro) did not regulate the modality, and the market grew wildly. By not regulating, he ended up allowing and encouraging these companies to use the resources they would use to pay the grant and taxes to invest in advertising”, he says.
José also says that the current legislation follows the best global practices and will be beneficial for the companies operating in the country. He recalls that the lack of regulation makes it difficult to precisely size the national bets sector, as well as any impacts on the economy.
“The regulation of sports betting in Brazil will allow the Ministry of Finance to monitor in real time the transactions and balances of bettors' accounts on betting sites. Currently, there is no precise information on how much money bettors have in these accounts, making control and data analysis difficult. With the new regulation, starting in January, the government will have access to this data, allowing the identification of suspicious movements, such as large bets on unlikely teams, which will facilitate the detection of result manipulation and control over betting operations in Brazil”, he states.
The Central Bank informed Estadão that it does not have specific data about the betting market, being reported along with health, education, and culture expenses. Thus, the studies that measure the size of the sector, the expenses, and the positive or negative impact on the national economy are estimates.
The president of the Legal Game Institute states that the Brazilian market began to receive various Chinese sites in 2024, seeking to explore the market before the regulation imposes the new entry barrier to the sector and prevents easy and quick gains in the country. For José, if there are no further changes in the legislation until the end of the law's deadline, the market tends to develop healthily in Brazil, attracting serious companies and investments.
Source: Estadão
