Brazil brings in new regulations for betting companies

The Brazilian finance ministry announced on Tuesday that in order for sports betting companies in the country to continue operating, they had to be headquartered in Brazil.

This will enable authorities to use oversight mechanisms in handling match-fixing and fraud, as well as collect tax on what is a largely unregulated market at present.

“The regulation will require that betting companies are based in Brazil,” said the ministry in a statement.

As most of the country’s gambling operators are based abroad, the new statute will aid in “improving the supervision, collection, and dialogue with the agents that operate in the sector”. The finance ministry did not state whether foreign-based companies will be able to meet the requirement by opening a locally headquartered division.

While Brazil passed a law in 2018 that permitted betting firms to hold operations in the country, such businesses have become lawless due to the flexibility of the regulations.

“Lack of regulation and collection of taxes also caused Brazil to fail to structure and maintain a monitoring network of suspicious behavior,” said the ministry.

It also stated that it hoped the new rule would aid in curbing match-fixing and money laundering, and in doling out sufficient penalties to the parties involved in regulation breaches.

The recent moves, which will also involving taxation of bookmakers, are among the initiatives Finance Minister Fernando Haddad revealed last week. Haddad is also searching for a new revenue stream to cater to the tax exemption program proposed by President Lula da Silva.

While nothing has been finalized, public accounts will reportedly see a considerable increase from 2 billion reals ($385m) to 8 billion reals ($1.54bn) every year. The finance ministry did not disclose what rates it was considering concerning the incoming sports betting tax.

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