The government should restrict sports betting payments to Pix and debit cards.

The government of Luiz Inácio Lula da Silva (PT) is expected to authorize only the use of Pix and debit cards as payment methods for fixed-rate bets, which include sports betting (so-called bets) and online games.

The measure should also stipulate that, in the case of the instant payment system, the Pix key must be linked to the player's own data, reveals a report by Folha de S. Paulo.

The intention of the measure is that the user can only allocate money to betting that they already have in their bank account.

By banning the use of credit cards in the betting market, the government seeks to prevent this activity from fueling the over-indebtedness of the Brazilian population and the addiction of gamblers.

The restriction imposed on the use of bank slips for online betting and gaming is a measure to prevent money laundering—considering that this payment method is often linked to this type of crime.

The discussion is part of negotiations led by the Ministry of Finance, together with the Federal Revenue Service and representatives of companies in the sector, to establish the parameters that will guide the operation of the sports betting market.

The next step will be to consult the PGFN (Attorney General's Office of the National Treasury) about the legal viability of the measure. After that, the idea still needs to be approved by Minister Fernando Haddad (Finance).

The bill regulating sports betting was approved by Congress at the end of last year. On December 30th, in an extra edition of the DOU (Official Gazette of the Union), Lula signed the text into law, with some vetoes.

The main provision overturned stipulated that bettors would be exempt from paying taxes on winnings from games and bets below R$ 2.112.

According to the president's order, maintaining this section "would lead to a different income tax treatment than that found in other lottery modalities, thus creating a distinction in tax conduct without any motivating reason for it."

The Executive's veto will still be evaluated by Congress and could be overturned. Industry members view Lula's decision with concern, as they believe the lack of exemption could not only deter users but also encourage them to migrate to clandestine and illegal markets.

Following the approval of the law, the federal government is working to issue a series of regulations that will define more specific aspects of the betting market.

There are still doubts about how the sector will be monitored, as well as what the requirements and procedures will be for authorizing a company to operate in Brazil.

The law outlines basic guidelines and establishes some criteria for the commercial exploitation of this market in the country, such as the formation of a company headquartered in Brazil, a minimum share capital for the companies, the implementation of a call center in Brazilian territory to assist bettors, a corporate structure, and the payment of a grant of R$ 30 million valid for up to 5 years of operation.

It is now up to the government, through regulation, to provide a detailed explanation of the requirements outlined in the law.

The new legislation stipulates a 12% tax rate on the revenue of betting houses (after deducting prize payments). Bettors, in turn, will have to pay 15% of the prize money they win.

Lula also approved the provision authorizing websites to host online casinos, in addition to sports betting. This section caused controversy during the bill's passage through Congress and was overturned by the Senate, but later reinstated by the Chamber of Deputies.

According to market estimates, 60% to 80% of the money moved by the fixed-rate betting sector comes precisely from online games, a category into which these casinos fall.

Because of this, the measure was seen by the government and the industry as important to ensure attractiveness. Critics, however, argue that it could increase the risks of user over-indebtedness and player addiction.

In a preliminary call for proposals, opened even before the law was approved, the Ministry of Finance received more than 130 expressions of interest from companies interested in operating in the Brazilian betting market.

The amount was recorded at a time when online casinos were included in the bill under consideration. The government estimates that, based on this, it can collect around R$ 3 billion in licensing fees alone.