House of representatives approves bill that legalizes and regulates gambling in Brazil

On February 24, the House of Representatives approved Bill No. 442/1991  drafted 31 years ago and aimed at legalizing gambling  in Brazil. The Bill will be submitted to the Federal Senate for approval and, if approved, will require presidential sanctioning to come into force.

The Bill aims to regulate the installation of casinos and the operation of bingo establishments, as well as sports betting and  “Jogo do Bicho” (a type of gambling game very common in Brazil).

Under the legislative proposal, the Ministry of Economy will be in charge of authorizing and licensing the operation of the gambling establishments and the games themselves. The ministry can request additional information and documents in order to verify the execution of the operation – including the origin of the resources involved.

Below are some highlights of the text approved by the House of Representatives:

• Casinos: the companies interested in operating these places of business must be incorporated in Brazil as a corporation and must participate in a public auction. These companies must also have a minimum capital stock of BRL 100 million invested. The Ministry of Economy will issue the authorization, which will be valid for 30 years. It will be prohibited, however, to grant an authorization license to more than one place of business per state for the same economic group and more than five places of business for the same economic group in the national territory. In addition, each state may have a maximum of one casino, except for Minas Gerais and Rio de Janeiro, which may have two, and São Paulo, three.

• Bingo and “jogo do bicho”: for these games, the authorization to operate will be granted through an auction and the interested company must be incorporated in Brazil as a corporation company and have a minimum capital stock of BRL 10 million invested. Regarding “jogo do bicho”, the Bill requires that all betting records be made digitally accessible in real time by the Government. In addition, the authorization (bingo halls) and accreditation (“jogo do bicho”) will remain valid for 25 years, renewable for another 25 years. The limit of bingo and “jogo do bicho” establishments per region will take into account the number of inhabitants in each of those regions.

• Taxation: The Bill creates a new tax named “Cide-Jogos”. Such tax involves a fixed rate of 17% for games, and an inspection fee for issuing the license. The incidence of Individual Income Tax imposed on those who win prizes with amounts equal to or greater than BRL 10,000.00 will be of 20% on the net winnings, that is, on the prize minus the amount paid to bet or play. The operating entity will withhold the tax.

• Crimes against gambling and betting: the Bill also establishes a list of crimes related to gambling games, such as the exploitation of any gambling, physical or virtual, without complying with the requirements set out in the proposed Law, as well as permission of financial transactions through credit cards, loans, or other forms of financing with international companies or websites, among others.

• Online games: the Bill informs that the exploitation of gambling through electronic or digital channels will be the subject of a specific regulation to be drafted by the Ministry of Economy.

• Temporary operation: “video bingo”, “jogo do bicho” and bingo halls will be temporarily authorized to operate if the government does not issue any specific regulation within 12 months of publication of the new Law.

• Contentious issues: despite its approval by the House of Representatives, Bill No. 442/91 still faces much criticism, and its final approval remains controversial and uncertain. Demarest is following all developments regarding this topic.

Demarest’s Public and Regulatory Law Team continues to monitor activities in the sector and is available should you need any further clarification on this and other related matters.