Zona de Azar Brazil – Sports Betting Brasil: ANJL Concerned About the Possibility of a “Selective Tax”

Brazil.- July 3, 2024 www.zonadeazar.com Some deputies of the working group in charge of regulating the tax reform discuss the inclusion of sports betting in the list of products taxed by the “selective tax”, in the PLP 68/ 24. According to information, the great possibility of inclusion was made clear in a meeting with the Minister of Finance, Fernando Haddad.

The “selective tax” is provided for in Constitutional Amendment 132 and establishes that it must be imposed on products harmful to health and the environment. Taxing sports betting is also seen as a type of alternative to compensate for the demands received by deputies.

In an official note, the ANJL stated that the “selective tax could make iGaming regulation in Brazil ineffective and encourage an illegal market.” According to the entity, the inclusion of sports betting and online games in the tax could encourage the illegal market. See the official ANJL note below.

Note from the National Association of Games and Lotteries (ANJL)

The National Association of Games and Lotteries (ANJL) expresses concern about the possibility of implementing a “selective tax” (or “sin tax”) for the sports betting and online gaming market, as has been considered by politicians and technicians who They are part of the regulatory process of the Tax Reform (PLP 68/2024). The measure could make the entire sector regulation process ineffective, since it tends to encourage the illegal market.

Law 14,790/2023, which regulated this market, established a tax rate of 12% on Gross Gaming Revenue (GGR, that is, the difference between the total volume of bets and the value of prizes paid) after intense coordination between the sector and the National Congress.

During the past year, the ANJL demonstrated to congressmen, through studies and data, that a heavy tax burden (the original proposal provided for 18%) would only scare away serious betting houses that wish to operate in the country in a regulated manner. and at the same time, it would cause illegal websites to proliferate even more in the country.

International examples show that the greater the weight of taxes, the less channeling through authorized sites and, therefore, the greater the channeling through irregular sites.

Considering the new taxes (IBS and CBS) provided for in the Tax Reform, the tax burden of the sector in Brazil should reach 32%, one of the highest in the world. This without considering the million-dollar payment of subsidies to the Union – and, depending on the decision of the operators, to the states and the Federal District – and the incidence of 15% of the Income Tax on the net prizes of the bettors.

Reverse effect

In this scenario, the institution of a “sin tax”, under the argument that it is a harmful activity for society, will cause exactly the opposite of what is desired: the abstention of companies that would collect taxes from operating in Brazil and the advance of websites that operate under total illegality.

Without collecting taxes, these companies will attract players and will not return to the State resources that could be used precisely in actions and tools to prevent gambling addiction. It should be noted that Law 14,790 already provides for the allocation of resources, coming from the payment of 12% of the GGR, to the Ministry of Health, for measures to prevent, control and mitigate social harm derived from gambling.

Therefore, the ANJL expects common sense from both the National Congress and the Executive Branch, when addressing this issue, so that Brazil does not scare away betting houses committed to the respect and health of bettors and attracts irregular ones, which They will act outside the law and the tax system itself.

National Association of Games and Lotteries (ANJL).

Edited: @_fonta www.zonadeazar.com