The Finance Ministry has received 23 requests from sports betting companies that want to operate in Brazil. The deadline to ensure that the operation is authorized by 1 January, however, expires on 20 August. The Sigap (Betting Management System), managed by the Treasury to receive requests, was opened on 23 May. This quick expansion comes with concerns about potential damage to the mental and economic health of gamblers.
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Payment of Tax
According to the rules established by the National Congress, companies will have to comply with the obligation to pay a fixed grant of R$30 million and allocate 12% of the revenue from bets to the public coffers.
New Rules
The Ministry of Finance has defined new “responsible gaming” rules to mitigate addiction and debt among online bettors. The rules provide for the creation of limits on the value of bets and the scheduling of the time spent by users on the platforms, for example. If the new rules are not complied with, bettors may be fined up to R$2 billion.
Advertising Prohibition
Three ordinances were published on Thursday (15) with the new rules. One of them deals with advertising in betting and prohibits influencers and celebrities from presenting online betting as a way to improve their lives. Companies will also be legally responsible for their affiliates’ advertising
User Monitoring
The government also determined that betting houses must monitor users’ behavior regarding their risks of addiction and suspend the use of the platform if necessary. Operators will have a legal responsibility to ensure compliance with the rules and will be subject to monitoring by the Prizes and Betting Secretariat (SPA) of the Ministry of Finance.
Average Spending
A study conducted by Strategy&, part of the PWC group, revealed that the average Brazilian spend on sports betting can reach 5.5% of the amount allocated to food in classes D and E (with a family income of up to 3 minimum wages) – this represents 1.38% of the family budget. The survey also found that betting is more common among lower classes and that spending affects the family budget. The data was published in the survey “The impact of sports betting on consumption” and analyzed the growth of the betting sector since 2018, the year in which the Federal Government sanctioned the law that included fixed-odds bets in the lottery modality and opened the way for companies in the segment to arrive in the country.
Analysis:
The rapid expansion of the sports betting industry in Brazil, evidenced by the 23 companies seeking authorization to operate, poses significant social implications, particularly for the lower-income classes. The average spending on sports betting among Brazilians, especially in classes D and E, suggests that betting is becoming a significant financial burden on already vulnerable populations. This diversion of income from essential needs like food to gambling raises concerns about increased financial strain and the potential for exacerbating poverty.
Enforcing regulations will be crucial to ensuring that they effectively protect consumers from the dangers of gambling addiction. The prohibition on influencers and celebrities promoting betting as a quick route to wealth is a positive step, but the real challenge lies in the ongoing monitoring and enforcement of these rules. If not properly managed, the proliferation of sports betting could lead to a rise in gambling addiction, negatively impacting the social fabric of Brazilian society, particularly among its most economically disadvantaged citizens.
Sources: A Folha de SP; Valor; Canaltech.
