Committee vote brings Brazil closer to online gambling regulation

Another step has been taken by Brazil towards launching a regulated online gambling market, after proposed comprehensive gambling legislation was amended and approved by a House of Representatives committee.

A great number of amendments proposed by senators for SB 186/2014 (pdf) were approved by the Special Committee on National Development (CEDN) on Wednesday, according to CalvinAyre.

Included in the bill’s vision for an overhaul of Brazil’s gambling market is the introduction of casinos, as well as video lottery terminals, and other options such as bingo, online sports betting, and casino products. While gambling is illegal in Brazil, a popular lottery-type drawing called “Jogo do Bicho” or “Animal Game,” is played in underground operations in 25 states, including Rio de Janeiro. The game has been outlawed by federal law since 1946, with the exception of the state of Paraiba, where it is legal and regulated.

The original version of 186/2014 had already been approved in December by CDEN. However, 16 amendments were proposed by senators. Five of them were added to the original text, including prohibiting public officials and their relatives from having any involvement in gambling business, as well as ensuring that applicants of gambling licenses are suitable.

The amended legislation now also includes defined tax rates for various gambling activities. Online gambling operators in Brazil will be made to pay twice the amount land-based operations are subject to by paying a rate of 20 percent gross revenue. The higher rate is justified by the bill by noting that much greater startup and maintenance costs are imposed by brick-and-mortar operations. That means that operators of online gambling will have a higher profit margin thus enabling the ability to pay more.

The number of online licenses Brazil intends to issue, or whether a partnering requirement between a Brazilian entity and international operators will be imposed, have yet to be determined. The bill also does not indicate the cost of a gambling license or duration. However, the bill does state that licenses issued to land-based operations will be valid for a period of 30 years. Up to 35 casinos are envisioned in the bill. Each state is allowed at least one casino, but no more than three, with companies also being limited to three apiece.

The financially struggling government estimates that once the bill is approved annual tax revenue of $4.15 billion could be earned. It is estimated by the president of the Brazilian Institute of Gaming that in order to gamble up to 200,000 Brazilians travel outside of the country each month and that Brazilian nationals comprise 70% of the gamblers in Uruguayan casinos.

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