Brazil should lose more than 3 billion in sports betting revenue this World Cup

The sports betting market has been recording significant revenue figures for some time, making the sector one of the most profitable and attractive in the world. The places that regulated the modality are now enjoying the many benefits that the segment can bring, such as more funds for investment in health, education, job creation and much more.

Brazil has great potential for the sports betting market, as with an audience predominantly passionate about football, the country could raise fundamental revenue for various areas of society.

However, on the eve of the 2022 World Cup in Qatar, the Brazilian government decides not to proceed with the regulation of the sports betting market this year. Veja published an article that explains a little more about the reasons for this decision and the amount that Brazil will lose in revenue.

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On the eve of the Soccer World Cup to be held in Qatar, between November and December this year, the government of Jair Bolsonaro decided to shelve the decree implementing Law 13,756/18, which regulates the sports betting market in the country.

The postponement of the measure, according to palace sources, has to do with the timing of the election, as the president fears losing support from the evangelical class by endorsing the practice of gambling.

With no time to regularize the market until the event, the government has already lost the chance to earn a hefty sum with the revenue generated by the activity. It is estimated that the regulation generates around 3 billion reais a year to the country’s coffers, in addition to 2 billion reais for the sale of operating licenses.

Approved in 2018, during the government of Michel Temer, the law aims, above all, to curb the evasion of foreign exchange. As several betting sites are based outside Brazil – most of them in countries considered to be “tax havens” –, taxation on games is considered insignificant compared to what it should be for a market with an estimated turnover of 7 billion reais and movement of approximately 60 billion reais.

The implementation of the law, according to its normal rite, would have to be implemented by December 2020, a deadline that was extended for another two years by the government. Now, that deadline ends in December this year, which will leave the market in legal limbo.

Apart from that, the lack of inspection makes it easier for new companies to operate freely in the country – not all of them, however, necessarily serious, which ends up facilitating bad deeds, fraud involving gamblers and, as a consequence, generating insecurity, including legal ones. In view of this scenario, a study group was prepared together with the PPI (Investment Partnership Program), the PND (National Privatization Program) and the BNDES, which managed a provisional measure that provides for market penalties.

The text was passed on to the Ministry of the Civil House and is now awaiting Bolsonaro’s sanction. “We are basically talking about penalizing an existing informality, protecting the gambler and curbing the evasion of foreign exchange. What we see today is bad for Brazilian society”, says André Gelfi, managing partner of the Betsson group in Brazil. “It is an activity that already moves 60 billion reais in the country, which has no rules and, until now, has been neglected by the public authorities. This is the size of the debacle”, he adds.

It is estimated that the World Cup alone will generate more than 20 billion reais in bets in the country. The government’s inaction on the subject means that little (or almost none) of this amount is taxed and generates resources for the Union’s funds.

“The collection during the World Cup would be three times higher than the average. The government will lose this collection, because there is no more time to do it until then”, says a source with knowledge of the subject. “If the regulation does not take place by its deadline, in December, the control bodies will pressure the government to understand what happened and hold the managers involved in the case accountable”.

Outside the law, in hiding, gamblers have already been the target of corruption, bribery and searches and seizures. The government holds the fate of this market in its own hands.