Magnho José warns that Brazil is “moving towards a regulation that could lead to failure”

With the current discussion of the bill that regulates the sports betting sector in Brazil, many executives and experts have questioned some of the changes brought by the measure.

For Magnho José, journalist and president of the Brazilian Institute of Legal Gaming (IJL), Brazil is making a “big mistake” in the process of regulating sports betting. In a text published in the specialized media BNLData, where he is editor, José pointed out critical points in the bill approved by the Chamber of Deputies and currently being processed in the Senate.

“The biggest problem lies in the exaggerated taxation of the activity at 18% GGR [Gross Gaming Revenue], added to the other taxes of a service provider company (13.33% to 16.33%) and the Administration Fee provided for in Law 13,756/18, could mean a total taxation of over 35%, not including the subsidy,” the editor of BNLData criticized.

However, the concern is not limited to taxation. José believes that the amendments of some parliamentarians could further harm the sector in other aspects. Senator Styvenson Valentim (Podemos-RN), for example, presented an amendment to the bill that “prohibits the promotion, in any media, of communication, advertising and marketing actions that promote the lottery of fixed odds,” as the text of the measure itself says, in reference to sports betting.

The regulation of gambling is seen by the federal government as an opportunity to increase revenues. In an interview with the newspaper O Globo, the Executive Secretary of the Ministry of Finance, Dario Durigan, stated that the sector could contribute around BRL 10 billion ($1.9 billion) a year to the public coffers.

In Magnho José’s opinion, this figure is a false illusion. “For anyone who is familiar with the issue, it is hard to believe that Bill 3626/23, the way it was passed in the Chamber of Deputies, could be a plan B for government revenues and generate BRL 10 billion in revenues,” he stated.

The seven commandments of legal gaming

Besides pointing out inconsistencies and critical points in the Bill, José brings as a positive example to follow the ideas of the former director of the Peruvian Gaming Commission, Manuel San Román, responsible for the regularization of the sector in the country neighboring Brazil.

The seven commandments of legal gaming, contributed by the Peruvian experience, are as follows:

  1. Regulate before prohibiting
  2. Prohibition leads to illegal gambling
  3. Illegal gambling leads to corruption
  4. Gambling is a sensitive activity that requires transparency
  5. Open door policy with operators
  6. Cannot regulate out of reality
  7. Prior publication of rules to allow for critiques and comments

Finally, José made an alarming statement. “One expert interviewed by BNLData believes that with this taxation of platforms, the exaggerated taxation of the bettor, the exclusion of online gambling, and with all the ‘strings attached’ contained in the bill, less than a dozen platforms would be able to operate.”