O Federal Government has been issuing a series of measures and new rules to discipline the sports betting market in Brazil and the famous "Bets"(companies that exploit this type of activity).
In turn, given the importance of the topic and the large number of doubts that are arising, the CLM Controller Accounting has decided to prepare a complete piece of content on the subject.
Here you will have the opportunity to check out the main changes and government requirements regarding the sports betting market in Brazil.
Read more about: The importance of a qualified ERP for online gaming companies
Regulation and taxation of sports betting
At the end of last year, the federal government published the Law 14.790/2023, which provides for the operation of the sports betting market.
Since then, other documents have been published to regulate items such as taxes and how funds are transferred between punters and bookmakers.
Read about: Labor compliancea for online gaming companies see how to reduce risks
Here are a few points worth highlighting:
Requirements for sports betting operations
According to the new law, only legal entities incorporated under Brazilian law, with headquarters and administration in national territory, that meet all the requirements of the Ministry of Finance with regard to:
- Minimum amount and form of payment for the share capital of the legal entity concerned;
- Requirement of proven knowledge and experience in gaming, betting or lotteries from at least one of the members of the controlling group of the interested legal entity;
- Requirements for holding and exercising positions of direction or management in the legal entities concerned;
- Appointment of director responsible for relations with the Ministry of Finance;
- Structure and operation of the service for punters and the ombudsman component of the operating agent;
- Appointment of a director responsible for customer service and the ombudsman's office;
- Technical and cybersecurity requirements to be met by the information technology infrastructure and systems of operating agents, with the requirement of nationally or internationally recognized certification;
- Integration or association of the operating agent with national or international sports integrity monitoring bodies; and
- Requirement to have a Brazilian partner holding at least 20% (twenty percent) of the legal entity's share capital.
In addition, companies will be obliged to prove the adoption and implementation of policies, procedures and internal controls:
- Customer service and ombudsman;
- Prevention of money laundering, terrorist financing and the proliferation of weapons of mass destruction;
- Responsible gambling and prevention of pathological gambling disorders; and
- Betting integrity and prevention of match-fixing and other fraud.
Read more about: Payroll in online gaming companies
Taxation on the sports betting market
Despite the desire of the federal government's economic team to tax sports betting companies at 18% and individuals' winnings at 30%. The approved legislation defined the following:
Despite the desire of the federal government's economic team to tax sports betting companies at 18% and individuals' winnings at 30%. The approved legislation defined the following:
- 15% on the net winnings of the bettors;
- Taxation of 12% on the turnover of betting companies.
In addition, it was decided that income of up to R$ 2,640.00 per month earned by bettors will be exempt from income tax.
Learn how to reduce the tax burden of online games
Exclusion of certain groups of punters
According to Law 14.790/2023Sports betting may not be placed by the following persons:
- Under 18 (eighteen) years of age;
- Owners, administrators, directors, persons with significant influence, managers or employees of the operating agent;
- Public officials with duties directly related to the regulation, control and supervision of the activity within the scope of the federative entity in whose staff they exercise their powers;
- Persons who have or may have access to computerized fixed-odds lottery systems;
- Persons who have or may have any influence on the outcome of a real sporting event.
- People diagnosed with ludopathy, by a report from a qualified mental health professional; and
- Other persons provided for in regulations issued by the Ministry of Finance.
[Read more about:] Online betting in Brazil understand everything about taxes and regulation
Exclusion of certain groups of punters
- Under 18 (eighteen) years of age;
- Owners, administrators, directors, persons with significant influence, managers or employees of the operating agent;
- Public officials with duties directly related to the regulation, control and supervision of the activity within the scope of the federative entity in whose staff they exercise their powers;
- Persons who have or may have access to computerized fixed-odds lottery systems;
- Persons who have or may have any influence on the outcome of a real sporting event.
- People diagnosed with ludopathy, by a report from a qualified mental health professional; and
- Other persons provided for in regulations issued by the Ministry of Finance.
[Read more about:] The importance of accounting for online betting companies
How prizes are paid
With the enactment of the legislation regulating sports betting, it was defined that the payment of prizes must be made by bookmakers exclusively by bank transfer.
In addition, the bank accounts must be owned by the respective bettors and held by them in institutions with headquarters and administration in the country that are authorized by the Central Bank of Brazil.
In addition Normative Ordinance 615 of the Ministry of Finance defined that electronic transfer is understood to mean orders to transfer funds by Instant Payment (PIX), Available Electronic Transfer (TED), debit or prepaid card, and wire transfer.
As a result, bookmakers are forbidden to accept financial contributions by means of:
- Cash;
- Payment slips;
- Checks;
- Virtual assets or other types of cryptoassets;
- Payments or transfers from an account that has not been previously registered by the bettor;
- Payments or transfers from third parties;
- Credit cards or any other post-paid payment instruments; and
- Any other electronic transfer alternative not provided for in the legislation in question.
[Article]: How an ERP optimizes company tax management
Bookmakers' financial reserve
Another important detail that is provided for in the set of laws and regulations on sports betting in Brazil is that which determines that bookmakers must set aside a financial reserve as a preventive measure in the event of insolvency or illiquidity.
The reserve in question is intended to guarantee the payment of prizes and other amounts due to players, and must have a minimum value of R$ 5,000,000.00 (five million reais).
In addition, the amount must be held in custody at a financial institution authorized to operate by the Central Bank of Brazil in the form of federal government bonds.
Finally, it is important to clarify that the balance of the financial reserve can only be used by the operating agent when other sources of funds have been exhausted.
Don't leave without reading: Internal Revenue Service regulates taxation of Fixed Odds bets
Accounting for sportsbooks
If you own or intend to open a sportsbook, you can count on the team of experts at CLM Controller Accounting.
Click on the WhatsApp button and talk to one of our experts to find out about our services and solutions for your business!
Regularize your business
Accounting Solutions for Bets
