Betting legislation should reduce the number of betting companies in the country and generate R$ 3 billion in revenue.
Until now, any company could create a website or app and compete for the preference of the Brazilian public for online betting, but this reality will soon change drastically.
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 them to operate in the market for five years, with up to three different brands per company, according to a special report by Estadão.
This measure is part of a comprehensive piece of legislation, inspired by international models, that aims to regulate the sector in a way that allows it to continue to exist, generate jobs in the country, and attract resources for the government.
Considering the just over 100 companies already registered, the government will collect an estimated R$3 billion in revenue from the R$300 million concession fee for operating in the betting market in the country, starting in 2025. According to experts, the fee will reduce significant revenue for betting companies, revenue that currently goes both into the pockets of business owners and into marketing investments. Furthermore, the law could severely restrict the sector, leaving only a few companies operating in the country.
The expectation is that the market will become more professional than ever before and that the legislation will unlock money for mergers and acquisitions and for venture capital investments.
The new law also provides for fines of up to R$ 2 billion for companies that operate in the Brazilian online betting market without paying the required license fee to the government.
The financial entry barrier for the national market was imposed by the Prizes and Betting Secretariat of the Ministry of Finance in May of this year. Companies have until December 31, 2024 to adapt to the new rules. They will also need to have R$ 5 million in cash guarantees.
With the payment of the license, companies can operate in both sports betting and online games, including roulette, casino, poker, and others. In other words, games like Fortune Tiger ("Little Tiger Game") will also need to pay for the license or they may have to leave the country. From an economic standpoint, business owners in the sector say it makes no sense to stop operating in every possible way to make the operation viable, especially with the 12% tax, plus state taxes.
According to estimates from the online traffic company SEMRush, Bet365, Betano, and Betfair currently have the largest audience numbers, making them the preferred choice for players. On average, over the last 12 months, these betting sites received 194,2 million visits per month. Brazil is among those with the highest audience numbers on these platforms, although it is not yet among the top earners.
Taxing betting establishments is a strategy by Finance Minister Fernando Haddad to increase tax revenue through taxation and licensing. The government estimates that revenue from the new legislation will be between R$ 12 billion and R$ 15 billion per year.
Limitations of the studies
According to Magnho José, president of the Legal Gaming Institute, which represents the sector, the Brazilian betting market has reached its current stage due to a lack of regulation within the initially planned timeframe. Under Michel Temer's government proposal, the sector should have been regulated within two years, with the possibility of extending the deadline by another two years.
With this postponement, the sector spent four years without clear rules. For José, the postponement occurred due to the religious bloc in the Chamber of Deputies. “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 concession and to pay taxes to invest in advertising,” he says.
José also says that the current legislation follows global best practices and will be beneficial for companies operating in the country. He points out that the lack of regulation makes it difficult to accurately measure the size of the national betting 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 account balances of bettors 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 it to identify suspicious transactions, such as large bets on unlikely teams, which will facilitate the detection of match-fixing and control over betting operations in the country,” he states.
The Central Bank informed Estadão that it does not have specific data on the betting market, as it is reported along with expenses for health, education, and culture. Therefore, studies that measure the size of the sector, its spending, and its positive or negative impact on the national economy are estimates.
The president of the Legal Gaming Institute states that the Brazilian market began receiving several Chinese websites in 2024, seeking to explore the market before regulation imposed the new barrier to entry for the sector and prevented easy and quick profits in the country. According to José, if there are no further changes to the legislation before the law expires, the market is likely to develop healthily in the country, attracting serious companies and investments.
