Brazil scrambles to tax sports betting and it means it

Nonchalance about the limbo status that taxing sports betting enjoys – read there is no tax on sports bets right now in Brazil – is about to end. Individual states have rolled their own laws, but a unified national legislation is still lacking, which in turn, hinders the opportunity to properly tax sports betting. With the presidency of Luiz Inacio Lula da Silva have come new promises and commitments to social welfare that understandably require the Ministry of Finance to muster new sources of revenue, with sports betting being a prime candidate.

Under the stint of Jair Bolsonaro, the former President, an attempt to introduce a law that would have taxed online sports gambling was waved through, but it never actually came into effect because of Bolsonaro’s apparent lack of interest in signing it. The current Finance Minister, Fernando Haddad, spoke to local media UOL, quoted by Reuters, and said that de Silva’s government was committed to ensuring that online sports gambling is finally paying its fair share.

This also has to do with purely practical considerations at a time when income tax exemption for workers who earn twice the minimum wage is also rolling in and will cost the budget an additional 3.2bn reais ($616 million) according to the ministry.

Haddad seems hawkish on sports gambling as well, as he believes that these companies have been remitting money abroad without giving anything back to the country. The exact numbers are anyone’s guess, although a Reuters source in the Ministry of Finance told the publication that the team working on the new proposal to tax online sports gambling could bring in as much as 2bn reais ($383m) and 6bn reais ($1.15bn).

The pitch of a new measure to tax sports betting is expected this month but it’s likely that the measure will be just a proposal without immediate legal ramifications for the sports betting industry as it is right now.

Haddad is determined to act as well, confirming that he would end up regulating online gambling come what may. "They don’t pay any taxes and take a fortune of money from the country," the minister said speaking to UOL. However, the minister publicly admits that he is not sure of how much revenue taxing sports betting could bring.

If Reuters’ source is correct, however, the money levied as a tax on betting should be sufficient to cover de Silva’s ambitious tax exemption, and then some. Much of the delay in the taxation of sports gambling can be blamed on the former president, who not only failed to press more aggressively for the sector’s taxation and regulation, but also didn’t muster his signature to officially launch regulated sports betting on a national level by the December 2022 deadline.

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