Brazil's Minister of Finance Fernando Haddad is introducing groundbreaking legislation that will finally create a legal sports betting industry for the country.
The bill, which is in the process of being sent to the committee stage, is intended to compensate the government treasury for the loss of tax revenue due to newly elected Brazil President Lula da Silva's decision to raise the minimum taxation rate in the country.
News of the pending sports betting legislation first broke last week when Haddad gave an interview to the Brazilian UOL media outlet and revealed his plans to legalize online sports betting sites in Latin America's most populous county and largest economy.
"I will regulate online gambling," said Finance Minister Haddad. "The [offshore sportsbooks] don’t pay any taxes and take a fortune of money from the country... Online gambling is subject to taxes all over the world, it can’t be different in Brazil.
"There’s an absurd amount of [tax] evasion in the country — a lot of money [leaves the country]. There’s no control because they’re not land-based casinos, they’re online casinos. [Our legislative proposal] is about the taxation of online casinos, which exist and need to be regulated."
Subsequent to Haddad’s statement, Deputy Felipe Carreras, newly appointed President of the National Tourism Forum, and the original author of the legislation, leaped into action.
On Friday, he was authorized by Arthur Lira, President of the Chamber of Deputies (Brazil's parliament) to begin gathering the necessary 171 signatures from deputies required to create the official commission to study and vet the bill prior to being sent for passage by Brazil's Chamber of Deputies and the upper legislative chamber, the Senate.
According to sources at the Ministry of Finance as reported by multiple Brazil-based media outlets, the bill in its current draft form only seeks to regulate sports wagering. Howver, it is expected that online casino gaming will later come under discussion by Congress.
More details are expected to be revealed Monday when Haddad is set to meet with Carreras, newly appointed President of the National Tourism Forum and a Deputy in Brazil's National Congress on behalf of the Lula administration's Worker's Party.
Haddad and Carreras are expected to spend several hours hammering out key points in the bill which Carreras first drew up several years ago under the title of Gambling Regulatory Framework.
According to December statements made by Edinho Silva, communications chief for President Lula, the regulation of Brazil's multi-billion dollar grey betting market would be a key target of President Lula's legislative agenda in 2023.
Reuters Brazil has also reported that the Finance Ministry has estimated that the potential revenue from the taxation of online sports betting is between two billion reals ($387 million) to six billion reals ($1.16 billion).
It is also estimated that there are around 450 active sports wagering and gaming platforms in Brazil, most of which are offshore companies that operate outside Brazilian law and are currently unregulated and untaxed.
Oddly, despite last week's announcement by Haddad that he would be introducing a bill to regulate "electronic gaming," he appears to have decided to narrow his focus to online sports betting which is believed to be the vast majority of wagering activity in sports-mad Brazil.
An October survey carried out by the Brazilian Globo news network found that one out of every six bettors in Brazil admits that sports betting is their main source of income.
Tracking down on offshore activity
Haddad is a vociferous proponent of gaming regulation and believes that legislation is urgently required to tax such activity — particularly online sports betting — to shift wagering to officially authorized sportsbooks as opposed to the hundreds of offshore sites.
According to Haddad, this would put Brazil "on par" with Europe and North America which are collecting substantial tax revenue from sportsbooks that are part of the legal regulated gaming industry.
Hunting down on match-fixing
The proposed betting legislation is also expected to introduce regulations that would combat match-fixing, which is the natural outcome of an unregulated sports betting industry.
Backed by Finance Minister Haddad, Deputy Carreras was spurred into action after the Brazilian government carried out its "Maximum Penalty" operation, which investigated the manipulation of results in Serie B soccer matches last year.
As reported by Brazil's Globo news network, Carreras believes that match-fixing is a serious threat to the integrity of Brazilian soccer as a whole and is another reason to regulate the sports betting industry.
"The manipulation of results in Brazilian football matches is becoming more and more evident," said Carreras. "There are speculations and insinuations that outside agents are acting to interfere in matches. We are seeing dissatisfaction from all sides. In Europe we had proven cases after investigations. Brazil is not immune, it is at the apex of a nebulous environment. Let's act."