Senate votes on bill that could end 80-year ban on casinos in Brazil.
The Brazilian Federal Senate is ready to vote on bill no. 2.234/2022, which deals with the legalization of land-based casinos in Brazil. The proposal has been under consideration in the National Congress for over three decades. The topic was debated in the opening panel of the second day of BiS Sigma, held this Wednesday (April 8th), with the participation of experts, authorities, and operators from the sector.
Carlos Cardama, co-founder of Brazilian iGaming Summit, moderated the panel “Physical Casinos in Brazil: From Proposal to Practice”. The debate brought together Senator Irajá Silvestre, rapporteur of the project in the Senate, and Alex Pariente, founder and CEO of Parent AdvisoryVinícius Lummertz, former Minister of Tourism and columnist for EXAME magazine, and Fábio Tibéria, Vice President of VBet Brazil.
Legal predictability as a condition for international capital
Alex Pariente addressed the need for predictability to attract international capital. He stated that Brazil is transitioning from an emerging market to one of institutional validation. "To attract large players, the country needs to offer a stable regulatory environment, not just market opportunities," he declared.
The expert warned that international investors need guarantees that the established rules will remain stable over time. According to him, without this alignment, the sector's development is stalled. Pariente indicated the need for convergence between the legal, regulatory, and political pillars.
Constant rule changes and the lack of a clear regulatory framework are driving capital away. The black market currently represents about 50% of the sector. Regulatory instability prevents large investors from considering the country a safe destination for investing resources. Pariente also highlighted that regulation should include robust mechanisms for... compliance and confidentiality and player protection, essential elements to guarantee the credibility of the Brazilian market in the eyes of international investors.
Projections indicate the creation of more than one million jobs.
Senator Irajá Silvestre presented an optimistic view on the progress of Bill 2.234/2022. Legalization could generate more than one million jobs in the next five years. The parliamentarian also estimated that the sector has the potential to attract around R$ 100 billion in investments during the same period.
The senator emphasized that Congress is working to build the necessary majority for approval. He mentioned the political challenge of securing a majority in the National Congress. Recent votes have had narrow margins, requiring constant work to persuade parliamentarians.
The bill's rapporteur stated that the political work of persuasion is progressing. The approval of Bill 2.234/2022 is a priority to create a stable and modern business environment in the country. The parliamentarian argued that Brazil wasted opportunities for tax revenue during the 80 years of prohibition of physical casinos.
He argued that the sector should be treated as an entertainment industry. Maintaining the ban prevents the country from exploring the economic potential of the activity. Irajá Silvestre emphasized that regulation provides for the creation of direct and indirect jobs in various areas, from gaming operations to hospitality, gastronomy, security and technology, contributing significantly to the reduction of unemployment in the country.
Brazilian tourism as a sleeping industry
Vinícius Lummertz argued that Brazilian tourism is a dormant industry. He argued that casinos should be seen as part of... resorts Integrated. The establishments would function as entertainment platforms that attract visitors and boost the local economy.
Lummertz classified Brazilian tourism as an underutilized industry. Casinos would function as anchors for events, gastronomy, and hospitality. The proposal stipulates that the establishments would not operate in isolation, but as part of integrated complexes. The former minister highlighted that cities like Rio de Janeiro, São Paulo, Foz do Iguaçu, and destinations in the Brazilian Northeast possess the infrastructure and tourist appeal to host such ventures. resorts World-class integrated systems, capable of competing with established destinations like Las Vegas and Macau.
The former minister addressed technical aspects of the proposed concession model. He suggested that the concession model needs to be attractive and realistic to enable billion-dollar investments. Lummertz advocated for long terms, such as 45 to 60 years, for concessions, arguing that this time horizon is necessary for investors to recover their invested capital and obtain an adequate return.
The expert warned against the need to consider "Brazil-centric" assumptions that don't work for global investors. These investors evaluate opportunities in various countries before deciding where to allocate resources. Lummertz emphasized that Brazil competes directly with other emerging markets in Latin America and Asia, where regulatory and tax conditions are already established and offer greater predictability.
Distinction between modalities online and physics
Fábio Tibéria clarified the distinction between casino online and physical. While the online While the focus is on gambling, the land-based casino is a complete entertainment destination. In land-based casinos, gambling accounts for between 25% and 35% of total revenue. The remainder comes from restaurants, shows, accommodation and other leisure activities integrated into the complexes.
This distinction is fundamental for the design of appropriate public policies. Participants in the debate warned that treating both models identically could result in inadequate regulation. The specific characteristics of each modality require different approaches in legislation.
Tiberia warned of the risk of the black market. He stressed that regulation should be done in a way that does not penalize legal operators with excessive taxes. The VBet executive highlighted that land-based casinos generate an economic impact far beyond direct gaming revenue, including the creation of local jobs, real estate development, attraction of corporate events, and strengthening of the regional supply chain.
Risk of strengthening the black market.
Fábio Tibéria and Senator Irajá warned that excessive taxes or poorly designed regulations could strengthen the illegal market. The clandestine market already comprises about 50% of the sector. It could expand if taxation is considered confiscatory by legal operators.
The central concern is that a high tax burden will make it impossible for casinos to operate legally. This would push consumers and operators into the informal sector. Experts argued that the tax burden should be balanced to enable legal operations.
Excessively restrictive rules would fuel the black market. This would harm tax collection and enforcement. Tiberia warned that excessive taxation would fuel the black market, harming operators who work within the law. The debaters cited international examples where tax burdens exceeding 30% on gross revenue made legal operations unviable, forcing the closure of establishments and the growth of illegal activity.
National Congress defines final regulation.
The Supreme Federal Court's decision represents an important milestone for decriminalization. Definitive regulation depends on the National Congress. The expectation is that approval will establish clear rules for the sector's operation, including criteria for granting licenses, suitability requirements for operators, oversight mechanisms, and the geographical distribution of establishments.
The participants agreed that Brazil has all the conditions to become a great player Globally, the land-based casino sector is a key player. The challenge now is to align political will with a regulatory framework that offers security to investors. Senator Irajá Silvestre emphasized that the bill under consideration includes safeguards against money laundering, protection for minors, and responsible gambling programs, aligning Brazil with international best practices in the sector.
Cardama warned that the delay in regulation harms Brazilian competitiveness. Neighboring countries in South America already exploit the casino sector. They attract investments and tourists. The lack of swift action causes Brazil to lose opportunities to regional competitors. The moderator highlighted that Argentina, Uruguay, Chile, and Colombia already have regulated and consolidated markets, attracting both investments and Brazilian tourists seeking this type of entertainment abroad.
