Gaming Law 2023 Comparisons

Brazil is the largest and most populated country in Latin America, with a total area of 3,265,080 square miles and a population of more than 214 million people (it is the fifth largest country in the world with regard to size, and the seventh in terms of population). Brazil is a federation divided into 26 states, one Federal District and 5,570 municipalities.

Almost all gambling activities have been prohibited in Brazil for over 75 years. In Brazil, gambling does not have a legal definition. Instead, Decree-Law No 3,688/1941 (the “Misdemeanours Law”), drafted with the intention of preserving social morality, provides in Article 50 for:

• the prohibition of “games of chance”, punishable with imprisonment for three months to one year; and
• a fine for those who establish or carry out games of chance in a public place or place accessible to the public, by means of the payment of an entry fee or otherwise.

There are three definitions of “game of chance”:

• a game in which the winnings and the losses depend exclusively or mainly on chance;
• bets on horse racing outside a racetrack or where they are authorised; and
• bets on any other sporting competition.

Since the general ban on games of chance in 1941, the only legal gambling activities are:

• the lotteries under the state monopoly; and
• horse-race betting.

According to Brazilian case law, poker is considered a game of skill and, therefore, is not illegal.

Several bills of law are currently under discussion in the Congress, comprising integrated resort casinos, bingos, online gaming and lotteries.

Recent Changes

After a gambling ban of more than 75 years, with a brief and failed attempt at regulation of bingo in the 1990s, Brazil has recently seen some development in terms of gambling activities.

Poker, although unregulated, is legal in Brazil, as it is considered a skill-based game. This understanding has been confirmed by several court decisions.

The opening of the Brazilian gambling market started with the creation of the virtual and land-based instant lottery (called LOTEX) by Law No 13,155/2015.

Law No 13,756/2018 created fixed-odds sports betting as a lottery modality, granting powers for the Ministry of the Economy to regulate it and issue the respective licences. According to the Law, the Ministry of the Economy had up to four years to complete the regulation. The formal deadline for this regulatory process expired in December 2022, and to date no penalties or legal consequences have been imposed for this delay.

2023 has seen significant discussions concerning the regulation of sports betting, both at national and at state levels. By October 2023, three states – Minas Gerais, Rio de Janeiro and Paraná – have commenced sports-betting operations within their territories. Additionally, the federal government is actively proposing initiatives for the nationwide launch of sports betting, scheduled for 2024.

Currently, the executive branch has already submitted to the National Congress:

• a Provisional Measure (Provisional Measure 1,182/2023, which needs ratification by both Congress Houses to enter into force for an indefinite period); and
• a Bill of Law (Bill of Law 3,626/2023, with constitutional urgency) aiming to bring additional obligations and requirements to sports-betting operations.

Most recently, the Minister of Finance signed Normative Ordinance No 1,330/2023 in late October 2023, establishing the general conditions for the commercial exploitation of the fixed-odds betting lottery, and regulating general rules regarding the matter. While the ordinance is not self-applicable and depends on the enactment of several other additional regulations, it sets forth some of the minimum requirements to which local operators will be subject when obtaining future licences awarded by the Ministry of Finance. It also offers to interested stakeholders the opportunity to submit a preliminary expression of interest. While this preliminary expression of interest does not grant immediate authorisation, it grants priority in the application process once it opens. Specific and additional regulations governing the application process are expected to be issued.

While the Congress is slowly progressing in the legalisation and regulation of gambling activities in Brazil, the courts are playing a noteworthy role in the definition of gambling-related precedents.

On 23 November 2015, a court decision in the southern state of Rio Grande do Sul ruled on the grounds that gambling is not illegal, since the prohibition set out in Article 50 of the Misdemeanours Law would be unconstitutional (Case No 0042094-45.2015.8.21.9000 from the State Court of Rio Grande do Sul). The public attorney has appealed the ruling before the Brazilian Supreme Court (RE 966177), and such appeal has been granted “general repercussion” effects, meaning its final award will be binding upon all other similar cases in the country.

On 6 June 2020, the Brazilian Supreme Court ruled (RE 634764) that the local tax on services (ISS) can be levied on betting activities and that the constitutional tax basis for horse racing is the amount of the “take” (equivalent to gross gaming revenue, or GGR). This is a seminal precedent for future discussions on the tax basis of sports betting, such that arguably ISS can only be levied on the GGR of sports betting.

On 30 September 2020, the Brazilian Supreme Court also ruled as unconstitutional the federal monopoly on lottery operations (ADPF 492, ADPF 493 and ADI 4,986). As a result, states were found to have the right to operate all the exact same lottery modalities created by the federal law. The federal government retains the exclusive constitutional competence to legislate on lottery issues, while the states and the Union share the right to operate the games.

This last ruling has a direct impact on sports betting, which was created as a lottery modality by Law No 13,756/2018, since all states will be able to operate sports betting within their territories. Currently, the majority of states are enacting state-level laws, and a number of them have already initiated preliminary studies (specifically, Amazonas, Distrito Federal, Maranhão, Minas Gerais, Paraná, Pernambuco, Rio de Janeiro, São Paulo and Tocantins) to assess the feasibility of offering lottery products potentially embracing sports-betting modalities, and aimed at choosing the best regulatory model (concessions, licences) to enable them to partner with private partners in future operations.

Under this scenario, the federal government is able to issue federal licences that will allow the federal licensees to operate online and retail businesses all over the national territory, regardless of any state licence. At the same time, each state is able to operate sports betting within its borders, directly or with a private operator as a partner. Since making a state lottery available outside the respective state territory is a criminal misdemeanour in Brazil, there will be a lot of discussion on how the place where the online bet is made will be determined.

Also, on 17 June 2021, the State of São Paulo Court of Appeals confirmed a circuit court opinion issued in 2020 (Case No 1038886-96.2017.8.26.0053), according to which, ISS cannot be levied on the whole amount of the buyins of poker tournaments, but only on the fees earned by the organiser (ie, total buyins minus prizes). More careful consideration is being given to GGR by the legal system as a regular and reasonable basis for taxation.

Sports Betting

Online fixed-odds sports betting was legalised by Law No 13,756/2018, recently amended by Law No 14,183/2021, and the Ministry of the Economy is currently working on the regulation, which is expected to be issued at the end of 2023. Pari-mutuel betting and head-to-head betting on sports events are prohibited.

Horse-Race Betting

Horse-race betting is regulated by Law No 7,291/1984 and Decree No 96,993/1988. Horse-race wagering is restricted to non-profit entities that own the racetracks, and that are duly authorised by the Ministry of Agriculture, Livestock and Food Supply. These entities may operate betting websites focused on horse-racing content.

Bingo

Online bingo is prohibited in Brazil.

Casinos

Online casinos are prohibited in Brazil.

Lotteries

The state-owned Caixa Econômica Federal currently runs the federal lottery and has recently launched a website to sell lottery tickets. All state-owned lotteries operating in Brazil are also authorised to offer their products online.

Poker

Poker has been recognised as a sport by the former Ministry of Sports, now the Secretariat of Sports, an agency of the Ministry of Citizenship. As a skill-based game, online poker is permitted, but there is no regulation in place.

There has been some discussion as to whether only poker tournaments should be legal, or whether ring games should also be authorised. Based on the civil law concept of betting, it is understood that ring poker games cannot be classified as a form of sports betting, even if they involve real money. Hence, provided that the rules of a ring game establish that the player must play for a minimum amount of time before being able to leave the table, the multiplicity of hands is enough to argue that the outcome of the game relies more on skill than chance, thus being legal in Brazil.

Fantasy Sports

Fantasy sports are not regulated in Brazil. Based on the fact that the result of a fantasy sports game depends more on the knowledge and skill of the players than on chance, it is understood that fantasy sports are permitted in Brazil.

Social Gaming

Social gaming is not regulated in Brazil. However, it is permitted, provided that chance is not the sole or preponderant factor in determining the final result of the game, or that the players are not entitled to win prizes with monetary value.

Offshore Gambling Offering

The territorial restriction set forth in Article 2 of the Misdemeanours Law – according to which, Brazilian law is only applicable to a misdemeanour committed in Brazilian territory – currently allows offshore online operators to offer their betting services to Brazilian residents.

Bets and games are types of contracts according to the Brazilian Civil Code (Law No 10,406/2002) and one of the general rules is that a contract by and between absent parties is deemed as executed in the place of the proponent. This is set forth by Article 9, paragraph 2 of the Law of Introduction to the Brazilian Rules of Law (Decree-Law No 4,657/1942) and repeated in Article 435 of the Brazilian Civil Code. Hence, if an offshore operator’s website is hosted in another jurisdiction where gambling is authorised, the contract between the Brazilian client and that operator is valid and subject to the law in the operator’s jurisdiction, being outside the scope of the Misdemeanours Law. Please note that these contracts are still enforceable in Brazil and the respective debts can be collected in this country.

Sports Betting

Land-based fixed-odds sports betting was legalised in December 2018 by Law No 13,756/2018 and amended in 2021 by Law 14,183/2021, and the Ministry of the Economy is currently working on the regulation, which is expected to be issued until the end of 2023. Pool betting, betting exchanges and head-to-head betting on sports events are prohibited.

Horse-Race Betting

Horse-race betting is regulated by Law No 7,291/1984 and Decree No 96,993/1988. Horse-race wagering is restricted to non-profit entities that own the racetracks, and that are duly authorised by the Ministry of Agriculture, Livestock and Food Supply. These entities may appoint agents to facilitate wagering on their behalf, and can also hire private suppliers, which are not subject to licensing or any specific regulation.

Bingo

Commercial bingos are prohibited in Brazil. In 2015, Law No 13,019/2014 was amended by Law No 13,204/2015, to include Article 84-B, which states that civil society organisations will be entitled to distribute, or promise to distribute, prizes – through sweepstakes, gift cards, competitions, or similar operations – in order to raise additional resources for their maintenance or costing. Based on this provision, several “non-profit” bingo halls are operating in the country, but according to SECAP’s understanding, these operations would need to have been previously approved by the Ministry of the Economy.

Casinos

Casinos are prohibited in Brazil.

Lotteries

Caixa Econômica Federal runs the federal lottery and has a network of over 13,500 agencies. Caixa was granted control of the federal lottery as a result of Decree No 50,954/1961, which cancelled all lottery licences granted to the private sector. Before the Supreme Court ruling issued in September 2020 (ADPF 492, ADPF 493 and ADI 4,986), only the lotteries of the states of Rio de Janeiro, Minas Gerais, Ceará, and Paraíba were operational.

Now, all the 26 states and the Federal District are able to open and operate their own lotteries, offering the same lottery products authorised by the federal legislation, including fixed-odds sports betting and instant lottery. Despite legal uncertainty, once the decision was analysed under the lens of federative autonomy and constitutional powers of states and municipalities, cities such as Guarulhos (state of São Paulo), Atibaia (state of São Paulo), Colatina (state of Espírito Santo) and Porto Alegre (state of Rio Grande do Sul) have been racing to enact their own legislation on lotteries as well as to allow for future operations on those same grounds.

Poker

Poker has been recognised as a sport by the Secretariat of Sports. As a skill-based game, online poker is permitted, but there is no regulation in place. There has been some discussion as to whether only poker tournaments should be legal, or whether ring games should also be authorised. Based on the civil law concept of betting, it is understood that ring games do not involve bets and are therefore also legal.

Gaming Machines

Gaming machines are prohibited in Brazil.

The general prohibition on gambling in Brazil is set forth in Article 50 of the Misdemeanours Law, which imposes imprisonment for three months to one year and a fine for those who establish or exploit games of chance in a public place or a place accessible to the public, by means of the payment of an entry fee or otherwise.

The federal lottery operated by Caixa Econômica Federal is regulated by several laws and decrees, mainly:

• Decree-Law No 6,259/1944 – provides for the lottery service, and other measures;
• Decree-Law No 204/1967 – provides for the operation of lotteries, and other arrangements;
• Law No 6,717/1979 – authorises the modality of the federal lottery governed by Decree-Law No 204/1967, and other measures;
• Law No 11,345/2006 – provides for the establishment of a lottery modality for the development of sports practice, the participation of football entities in this contest and the instalment of tax debts, besides amending Laws No 8,212/1991 and 10,522/2002 (and other provisions); and
• Decree No 6,187/2007 – regulates Law No 11,345/2006 and establishes the lottery modality called TimeMania.

LOTEX (the instant lottery) was created by Law No 13,155/2015, was amended by Law No 13,756 of/2018, and is regulated by Decree No 9,327/2018. Decree No 11,675/2023 regulates LOTEX and allows the Ministry of Finance to authorise, on a temporary basis, the direct operation by Caixa Econômica Federal for a specified period or until the commencement of indirect operation by the winning operator of the future concession-bidding process.

Horse-race betting is regulated by Law No 7,291/1984 and Decree No 96,993/1988.

Fixed-odds sports betting was legalised by Law No 13,756/2018 and was recently amended by Law 14,183/2021, Law No 14,155/2022, Law No 14,597/2023 and Provisional Measure No 1,182/2023.

Law No 14,455/2022 authorised the federal executive power to create the health and tourism lotteries.

In Brazil, gambling does not have a legal definition. As a matter of fact, the word “gambling” does not have a perfect translation into Portuguese. It can mean a bet or a game, involving a consideration, a prize and chance.

A “game” is a contract type that can be defined as a legal transaction whereby two or more people hold a particular promise (usually with pecuniary content) in favour of the person who achieves a favourable result in the performance of an act in which the parties participate.

Note that the game (and thus the success or failure of each party) necessarily depends on the performance of each party (called a “player”), either by their intelligence, skill, strength or pure luck.

A “bet” is another contract type, defined as a legal transaction in which two or more people with different opinions on a certain event promise to perform a particular action (in general, with monetary content) to the benefit of the party whose opinion prevails. Hence, in the bet, there is no requirement for the active participation of any party (called a “bettor”) to influence the outcome of the event, but rather only the expression of their personal opinion.

The subtle difference between a “game” and a “bet” is that the result of a game will depend on the action of the parties, while the result of a bet depends on facts unrelated to the parties’ will. Such legal definitions have been construed by judicial precedent and are not expressly set forth by law, even though they are widely accepted and applied by the Brazilian courts.

Article 50 of the Misdemeanours Law establishes that the operation of games of chance in a public place or in a place available to the public is subject to imprisonment for between three months and one year, and to a fine. “Games of chance” are defined as:

• games in which winning or losing depends exclusively or predominantly on chance;
• bets on horse races outside the racetrack or other authorised venues; and
• bets on any other sporting competition.

“Public place” includes:

• a private house in which games of chance are held, in which usual players or participants are not members of the family at the dwelling;
• hotels or collective residences where guests or residents are offered games of chance;
• headquarters or premises of a company or association where games of chance are held; and
• establishments that aim to operate games of chance, even if their purpose is disguised.

Games of chance are treated as misdemeanours, which are recognised by law as offences punishable by minor penalties (Article 61 of Law No 9,099/1995). In other words, a misdemeanour is a lesser offensive crime when compared to a criminal violation of Brazilian law. The term “misdemeanour” is related to setting out “public morality”, which, according to Professor Humberto José da Nova, includes “safeguarding morality” in order to “prevent certain illegal and vicious acts, or defend certain moral sentiments regarded as indispensable to harmonious social co-existence, the effects of which are harmful to the interests of the collectivity”.

Contrary to this, “skill-based games” are those in which the results depend on the ability of the player more than on luck. This is the case with poker, for instance, and these games are legal in Brazil.

The Misdemeanours Law dates from 1941 and does not differentiate between online and land-based activities.

Decree No 9,327/2018, which regulates LOTEX, defines physical bets as those made by the client upon the purchase of a printed ticket and virtual bets as those made by the client via electronic channels.

Law No 13,756/2018, which introduced fixed-odds sports betting as a lottery modality, sets forth that this can be offered by both land-based and online operators.

See 3.3 Definition of Land-Based Gambling.

According to Article 50 of the Misdemeanours Law, a person is guilty of illegal betting if they establish or explore games of chance, an offence punishable with imprisonment for between three months and a year, and with a fine. Whoever is found taking part in a game of chance, even via the internet or any other means of communication, as a cashier or bettor, is subject to a fine that ranges from BRL2,000 to BRL200,000.

Currently, all prosecution cases related to Article 50 are suspended until the Brazilian Supreme Court judges Extraordinary Appeal No 966,177. The scope of that judgment will be to determine whether Article 50 of the Misdemeanours Law complies with the constitutional precepts concerning free enterprise and fundamental freedoms, as provided for in Articles 1, IV; 5, XLI; and 170 of the Federal Constitution.

An unlawful gambling operator can be penalised with imprisonment for between three months and a year, and with a fine. Players and punters involved with unlawful gambling are subject to fines ranging between BRL2,000 and BRL200,000.

Since the general ban on games of chance was imposed in 1941 by the Misdemeanours Law, and reinforced by Decree-Law No 9,215/1946, several bills of law have been discussed in the Congress for the legalisation of gaming activities. Currently, they are appended to Bill of Law No 442/1991, which was already approved at the Chamber of Deputies and awaits a further vote at the Federal Senate.

Once a bill of law is approved on the floor of one of the Houses of Congress, it will have to be approved by the other House. If amended, it will need further approval of any amendments by the House of origin prior to being presented and signed by the President.

Bill of Law No 186/2014, which also aimed to regulate gambling in general, was archived at the end of 2022. In contrast, Bill of Law No 442/1991 was approved in February 2022 by the Chamber of Deputies and is currently awaiting a vote in the Senate. It is expected to be voted on during the forthcoming year of 2024.

Regarding the regulation of sports betting and supplementary obligations, the most probable course of action is Bill of Law No 3,626/2023, which was introduced by the executive branch with constitutional urgency in July 2023 and is currently awaiting further analysis by the Federal Senate. As it was proposed under exceptional circumstances, it is expected that a vote on this bill will be concluded by the end of 2023. In contrast, Provisional Measure 1,182/2023, covering a number of similar topics, has not seen significant discussions. The joint committee responsible for its analysis has yet to complete its composition, and the 244 proposed amendments remain pending deliberation. There is speculation that lawmakers may intend to let the Provisional Measure expire, as some of its content has been included in Bill of Law No 3,626/2023.

Bill of Law No 442/1991 (Renumbered at the Senate to Bill of Law No 2,234/2022)

The details of this bill are as follows.

• Origin: Chamber of Deputies.
• Summary: authorises the operation of games of chance in Brazil.
• Status: approved by the Chamber of Deputies.
• Next steps: awaiting a session vote at the Senate.
• Modalities: casinos, bingos, fixed-odds sports betting, videobingo, online gaming, jogo do bicho.
• Licences:
1. casinos – public bid for concession, 30-year term, renewable for equal terms;
2. bingos – authorisation for 25 years, renewable for one equal term;
3. jogo do bicho – BRL10 million minimum paid-up capital, 25-year term, renewable for equal terms;
4. online gaming – not defined; and
5. videobingo – not defined.

Bill of Law No 213/2017

The details of this bill are as follows.

• Origin: Senate.
• Summary: prohibits transactions with credit or debit cards, or e-currencies aimed at taking part in games of chance at foreign-hosted websites.
• Status: draft presented by the sponsor, Senator Ciro Nogueira, was proposed by the rapporteur, Senator Jorginho Mello, to proceed to consideration at the Commission of Economic Affairs (CEA). Following presentation of Amendment No. 1 by Senator Plínio Valério, the rapporteur asked for further analysis to be taken before the voting session by the CEA can be resumed.
• Next steps: voting in the Commission of Economic Affairs to be scheduled.

Bill of Law No 2,648/2019

The details of this bill are as follows.

• Origin: Senate.
• Summary: regulates casino activities in resorts located in the Brazilian territory.
• Status: draft presented by the sponsor, Senator Roberto Rocha, is pending analysis by the rapporteur, Senator Angelo Coronel, at the Commission of Regional Development and Tourism.
• Next steps: report to be presented by Senator Angelo Coronel.
• Modalities: any and all gaming modalities operated in casinos.
• Licences: all gaming modalities must be approved by the federal government.

Bill of Law No 3,234/2019

The details of this bill are as follows.

• Origin: Chamber of Deputies.
• Summary: authorises the establishment of Special Touristic Regions in North-East Brazil.
• Status: report presented by the rapporteur, Representative Eduardo Bismarck, was approved with amendments by the Tourism and Taxation Commissions.
• Next steps: awaiting a vote at the Commission of Constitution, Justice and Citizenship (CCJC).
• Modalities: not expressly referred to.
• Licences: all gaming modalities must be approved by the federal government.

Bill of Law No 4,495/2020

The details of this bill are as follows.

• Origin: Senate.
• Summary: regulates expansion of the tourism industry by establishing integrated resorts in the Brazilian territory.
• Status: nomination of Senator Veneziano Vital do Rêgo as the rapporteur at the Senate floor.
• Next steps: voting on the floor of the Senate to be scheduled.
• Modalities: any and all games of chance operated in casinos.
• Licences: all gaming modalities must be approved by the federal government.

Bill of Law No 845/2023

The details of this bill are as follows.

• Origin: Senate.
• Summary: regulates fixed-odds sports betting (apostas de quota fixa or AQF).
• Status: floor of the Senate.
• Next steps: voting on the floor of the Senate to be scheduled.
• Modalities: sports-betting operations.
• Licences: unlimited, to be issued by the executive branch.

Bill of Law No 3,626/2023 (With Constitutional Urgency)

The details of this bill are as follows.

• Origin: executive branch.
• Summary: regulates fixed-odds sports betting.
• Status: awaiting a session vote at the Sports Commission and at the Economic Affairs Commission (CAE).
• Next steps: voting on the floor of the Senate to be scheduled.
• Modalities: sports-betting operations.
• Licences: unlimited, to be issued by the executive branch.

During the previous government, SECAP was in charge of regulating lotteries, including the fixed-odds sports-betting lottery modality. However, according to the current wording of Law No 13,756/2018, sports-betting regulation is under the Ministry of Finance (Law No 13,756/2018 Article 29). The specific unit inside the Ministry for regulating such practice is due to be reformulated under the new government, which took office on 1 January 2023.

The Ministry of Agriculture, Livestock and Food Supply is responsible for the regulation of horse-race betting.

In general, Brazilian regulation tends to be prescriptive. Consumer and data protection rules, on the other hand, are more risk-based, with the operator being held liable for the negative effects on consumers and data subjects, even if the prescriptive regulations have been complied with.

At the federal level, more specific rules related to the availability of sports-betting licences are expected to be enacted soon. Additionally, there will be a designation of the specific unit within the Ministry of Finance responsible for overseeing this matter.

Sports Betting

According to the last legal documents published (Normative Ordinance No 1,330/2023) and proposed by the executive branch (Provisional Measure 1,182/2023 and Bill of Law 3,626/2023), an accreditation model likely applies, without a predefined number of licences to be issued.

Horse-Race Betting

The horse-race betting licence issued by the Ministry of Agriculture, Livestock and Food Supply is called Carta Patente.

Poker

Poker does not require specific licences.

Fantasy Sports

Fantasy sports do not require specific licences.

Social Gaming

Social gaming does not require specific licences.

Sports Betting

Licences are not yet available at the federal level.

Horse-Race Betting

Licences can be obtained at the Ministry of Agriculture, Livestock and Food Supply.

Lotteries

There are no lottery licences available in Brazil at the federal level.

Sports Betting

This is yet to be determined.

Horse-Race Betting

Horse-race betting licences do not have an expiry date.

Sports Betting

Specific application requirements are yet to be issued. General application requirements have been released by the executive branch through the enactment of Normative Ordinance No 1,330/2023. Entities interested in obtaining authorisation for commercial exploitation of fixed-odds betting can submit a preliminary expression of interest to the Ministry of Finance. This prior expression of interest does not grant authorisation, but gives priority in the application process when it opens. As of now, general requirements for the applicant include:

• being a national or foreign (subsidiary) entity established in Brazil; and
• providing documents ensuring its legal, tax, economic-financial and technical suitability.

Horse-Race Betting

The applicant must:

• be a non-profit entity legally incorporated in Brazil;
• own or have the rights to use a racetrack;
• demonstrate the technical and economic viability of the weekly racing schedule;
• present the floor plan of the race field; and
• present the draft of a general betting plan (which includes the rules applicable for each game to be run by the operator, such as prizes, ticket value, minimum and maximum betting amounts, and payout).

Lotteries

Currently, there are no lottery licences available in Brazil at the federal level.

No information has been provided in this jurisdiction.

No information has been provided in this jurisdiction.

No information has been provided in this jurisdiction.

Land-based gambling is restricted to federal and state lotteries, horse-race betting at racetracks and agencies, poker rooms, and future LOTEX and sports-betting points of sale.

Premises licensing varies according to the gambling modality.

Caixa Econômica Federal’s lottery agencies are concessions granted by the federal government, and the premises licences are granted by Caixa.

Horse-race entities must apply for their agents’ and agencies licences before the Ministry of Agriculture, Livestock and Food Supply. The horse-race entity remains entirely responsible for any and all acts of the agent. The agent’s licence is granted to the agent (an individual or a legal entity) to facilitate wagering only at the specified venue.

The Brazilian Supreme Court’s ruling from 30 September 2020, which ruled as unconstitutional the federal monopoly on lottery operations, completely changed the landscape of land-based gaming in the country. Every state now has the right to operate all the exact same lottery modalities created by the federal law, and this will increase the offering of lottery products in the country. It will also create a variety of legal arguments between the states and the Union on how much room the states have to innovate and to create attractive features in their local lotteries.

B2C licences are not yet available at the federal level.

There are currently no regulations on B2B licences at the federal level.

There are currently no regulations on affiliates in Brazil.

There are currently no regulations on white-label providers in Brazil.

Bill of Law No 3,626/2023

Online gaming has been added to the content of Bill of Law 3,626/2023 in the Chamber of Deputies. However, this inclusion is facing considerable criticism in the Senate since the initial intent was to specifically regulate sports betting, not online gambling in general. If the text is amended and enacted into law, additional regulations from the executive branch are expected to be released soon regarding this matter.

Gambling Regulatory Framework Bill (Bill of Law No 442/1991, Renumbered as Bill of Law No 2,234/2022 in the Senate)

Online games are also included in the Gambling Regulatory Framework Bill. However, the bill does not provide further guidance on the specific modalities to be included in this concept. Additional regulations on this matter are expected to be issued by the executive branch through the Ministry of Finance.

There are currently no technical measures in place in Brazil at the federal level.

Normative Ordinance No 1,330/2023, which establishes general conditions for the commercial exploitation of the fixed-odds betting lottery, provides that responsible gaming measures must be put in place to:

• prevent compulsive or pathological gambling;
• protect vulnerable individuals; and
• ensure bettors are over 18 years of age, and advertising and marketing must be responsible and avoid targeting children or adolescents.

Among the requirements already established, there is the obligation for the operator to promote informative and preventative actions to raise awareness among bettors about compulsive or pathological gambling disorders, by creating codes of conduct and disseminating and implementing specific policies on best practices and harm reduction.

Normative Ordinance No 1,330/2023 establishes that responsible gambling consists of measures, guidelines and practices to be adopted for:

• the prevention of compulsive or pathological gambling disorders;
• the prevention and non-inducement of debt; and
• the protection of vulnerable individuals, especially minors and the elderly.

Without prejudice to the provisions therein, other information may be required in specific regulations issued by the Ministry of Finance. According to the same rule, operators are prevented from:

• accepting payment instruments that offer post-paid accounts to the bettor;
• accepting cash;
• issuing proposal invoices; and
• accepting third-party deposits into the bettor’s account.

Normative Ordinance No 1,330/2023, which establishes general conditions for the commercial exploitation of the fixed-odds betting lottery, provides that operators must have internal control mechanisms and systems that allow the bettor to establish:

• a daily limit for gambling or betting;
• a maximum loss limit;
• a pause period; and
• self-exclusion.

Law No 9,613/1998, as amended by Law No 12,683/2012, defines the AML legal framework in Brazil. Pursuant to Article 1, money laundering under Brazilian legislation is the act of hiding or disguising the nature, origin, location, disposition, remittance or ownership of property, goods, rights or values arising directly or indirectly from a criminal offence. This law created the Conselho de Controle de Atividades Financeiras (COAF), the regulatory body in charge of pursuing, investigating and sanctioning any activity related to money laundering crimes. COAF issues directives to regulate activities of industries that may facilitate money laundering, such as gambling.

Ministry of Finance Ruling GM/MF No 537/2013 establishes procedures to be adopted by entities that distribute money or goods through the operation of lotteries, for the purpose of preventing money laundering and the financing of terrorism. All prize-winners must be identified and all prizes recorded, including:

• prize description;
• related amounts and handover dates; and
• the winners’ names, identification documents and personal addresses.

More recently, Ministry of Finance Normative Ordinance No 1,330/2023 provides that sports-betting operators must inform the Financial Activities Control Council (COAF) in the case of suspected money laundering activities, and must develop and implement policies, procedures and internal controls to identify, assess, control and monitor the risks associated with money laundering, terrorist financing and proliferation of weapons of mass destruction.

For the purpose of preventing money laundering and the financing of terrorism, Ministry of Finance Ordinance GM/MF No 537/2013 establishes that entities that distribute money or goods through the operation of lotteries should pay special attention to serious suspicions of crimes defined in Law No 9,613/1998, as amended, and communicate suspicious transactions to COAF, such as:

• ticket sales, the acceptance of bets or payment of prizes per decentralised units, per products and on a consolidated basis, in an accumulated amount or frequency considered unjustified in terms of the location, frequency, quantity or value;
• the payment of a prize involving a person domiciled in a jurisdiction considered by the Financial Action Task Force (FATF) as high risk or characterised by strategic deficiencies in preventing and combating money laundering and the financing of terrorism, or in countries or dependencies qualified by the Federal Revenue Service of Brazil (RFB) as a favoured taxation or privileged tax regime;
• the payment of more than one prize to the same person;
• the payment of a prize based on the maximum allowed bet for the game type;
• resistance by the client or others involved to provide information, the provision of false information, or difficult or onerous verification, for identifying the client or registering the operation; and
• acts of the client or others involved to induce the non-compliance of records requirements established by the legislation to prevent money laundering and terrorist financing.

Regardless of analysis or any other consideration, the following operations or proposed operations must be communicated to COAF:

• payment of a prize, in cash, of BRL10,000 or more, in any type of game;
• payment of a prize, by means of a cheque issued to the bearer, of an amount equal to or greater than BRL10,000, in any type of game; and
• any case involving terrorism or terrorism suspicions.

If the operator does not communicate any suspicious transaction to COAF during the calendar year, it must issue a negative certification to SECAP by January 31st of the following year, confirming there was no occurrence in the previous year.

The recent Normative Ordinance No 1,330/2023 issued by the Ministry of Finance confirms this mandatory communication with COAF, and additionally provides that, in order to obtain authorisation to operate fixed-odds betting, operators must develop and implement policies, procedures and internal controls that are effective and consistent with the nature, complexity and risks of the respective operations, and should include:

• a policy for the prevention of money laundering and terrorism financing, including guidelines on risk assessment in the underwriting of operations;
• the establishment of criteria and the implementation of procedures for the identification of customers, beneficiaries, ultimate beneficiaries, employees, third parties, and other related parties, as well as the maintenance of physical and/or electronic records related to products and procedures exposed to the risk of being used for money laundering and terrorism financing;
• the implementation of procedures for the identification, monitoring, risk analysis, and reporting of operations that may constitute indications of money laundering; and
• the development and execution of an ongoing training program aimed at disseminating a culture and qualification, according to their respective functions, of employees, partners and outsourced service providers, specifically for compliance with the provisions of the AML legislation.

Decree No 57,690/1966 and Decree No 4,563/2002 regulate advertising in Brazil and, according to the latter, all advertisements in Brazil must comply with the rules set forth by the Standard Rules Executive Council (CENP). This council is responsible for regulating the commercial relations between advertisers and agencies, while the National Council for Advertising Self-Regulation (CONAR) is responsible for ensuring ethics in advertising content.

Both CENP and CONAR are non-governmental organisations comprised of members of the advertising industry, and define their own statutes and codes. CONAR’s Self-Regulation Code also includes a specific rule, according to which, advertisement content must not “induce criminal or illegal activities”.

The legal definition of advertising is set forth by Article 2 of Decree No 57,690/1966 as any paid form of dissemination of ideas, merchandise, products or services by an identified advertiser.

Currently, the only criminal provision regarding gambling advertising is the prohibition to promote illegal lotteries, established by Article 51 of the Misdemeanours Law.

CONAR’s restrictions on gambling advertising have been based on the rule set forth by Article 21 of CONAR’s Self-Regulation Code, according to which, advertisement content must not induce criminal or illegal activities, or encourage, stimulate or incite such activities.

Since sports betting is no longer illegal, even before the issuance of the licences, international operators have been advertising in Brazil and sponsoring football teams.

During the fixed-odds sports-betting regulation process, it is expected that a new criminal provision will be established to penalise advertising of unlicensed operators.

No advertisement may:

• encourage or stimulate any type of offence or racial, social, political, religious or national discrimination;
• contain statements or visual or audio presentations that may offend the decency standards of the audience it intends to reach;
• exploit the consumer’s credulity, lack of knowledge or inexperience;
• cause fear without a relevant social reason; or
• exploit any type of superstition.

In the specific area of sports betting, Normative Ordinance No 1,330/2023 provides that advertising, public relations and marketing actions for these operations may not:

• be aired in schools and universities;
• lack an age restriction notice, embodied by the “18+” symbol or the notice “prohibited for individuals under 18 years of age”;
• disseminate misleading claims about the odds of winning or the potential gains that bettors can expect;
• portray betting as socially appealing or contain statements from celebrities or digital influencers that suggest gambling contributes to personal or social success or improved financial conditions;
• use sexually suggestive messages or objectify physical attributes;
• incite intensification or exaggeration in the practice of betting;
• promote the product as a means to recover losses from previous bets or other financial losses;
• in any way offend cultural beliefs or traditions of the country, especially those against gambling; and
• suggest or induce the belief that, among other situations, skill, dexterity or experience can influence the outcome of a sports event.

This Normative Ordinance also establishes that the advertising of the fixed-odds betting modality, in nationally televised sports competitions, is prohibited for operators authorised to operate fixed-odds bets exclusively in the states and the Federal District.

Article 50 of CONAR’s Self-Regulation Code states that violators of the rules established in that Code are subject to the following penalties:

• a warning in writing;
• a recommendation to modify or correct the advertisement;
• a recommendation to the vehicle to suspend the broadcasting of the advertisement; and
• a public disclosure of CONAR’s opinion as regards the advertiser, the agency and the vehicle for non-compliance with the measures so recommended.

Currently, legislation provides that CONAR may establish restrictions and guidelines additional to the regulations of the Ministry of Finance, and may issue specific recommendations for communication, advertising and marketing actions of the fixed-odds lottery betting (Law No 13,756/2018, Article 33, paragraph 2).

In the specific area of sports betting, the Brazilian Institute of Responsible Gambling (Instituto Brasileiro de Jogo Responsável, hereinafter IBJR) published the Brazilian Self-Regulation Code in Advertising during the first half of 2023, with the goal of establishing reasonable and proportionate guidelines for online sports-betting operators, media outlets and content producers when conducting promotions or broadcasting advertisements targeted at audiences in Brazil regarding online sports-betting products.

Most recently, in June 2023, a collaboration was announced between IBJR, the Brazilian Association of Games and Lotteries (ABJL) and CONAR. The objective of this collaboration is to engage in conversations regarding established global ethical standards, which are intended to be incorporated into future regulations introduced by CONAR within Brazil.

There are currently no acquisitions or changes of control regulations in place for sports betting and horse-race betting in Brazil.

There are currently no regulations in place for change of corporate control triggers.

There are currently no requirements for passive investors in acquisitions or changes of control.

According to the current wording of the legislation related to sports betting, which is likely to expire in the near future, the partner or controlling shareholder of a fixed-odds lottery-betting operator company, either individually or as part of a control agreement, may not hold a direct or indirect stake in a football joint-stock company or a professional sports organisation, nor act as a manager of a Brazilian sports team (Law No 13,756/2018 Article 33-C, as amended by Provisional Measure No 1,182/2023).

Horse-Race Betting

The Ministry of Agriculture, Livestock and Food Supply is the regulatory body in charge of regulating, monitoring and enforcing the regulation and penalties involving racetracks in Brazil.

Sports Betting

SECAP is the regulatory body in charge of regulating, monitoring and enforcing the regulations and penalties for lotteries in Brazil, which includes the fixed-odds sports-betting lottery modality, both land-based and online. It is expected that a specific unit inside the Ministry of Finance will be designated to deal with sports-betting regulation under the new federal government, which took office on 1 January 2023.

According to the current wording of the legislation related to sports betting, which is likely to expire in the near future, administrative sanctions include:

• a warning;
• in the case of a legal person, a fine ranging from 0.1% to 20% on the revenue product after deducting the related to the payment of prizes and of contributions to social security, relative to the last fiscal year before the initiation of the administrative sanctioning process, which shall never be less than the advantage obtained, when its estimation is possible, nor exceed BRL2 billion;
• in the case of other natural or legal persons of public or private law, and any associations of entities or persons constituted in fact or in law, whether temporarily or not, with or without legal personality, not engaging in business activity, and when it is not possible to use the revenue product criterion, the fine shall be between BRL50,000 and BRL2 billion per infraction;
• partial or total suspension of the exercise of activities for a period of up to 180 days;
• revocation of authorisation, extinction of permission or concession, cancellation of registration, disaccreditation or similar releasing action;
• prohibition from obtaining ownership of a new authorisation, grant, permission, accreditation, registration or similar releasing action for a maximum period of ten years;
• prohibition from carrying out certain activities or types of operations for a maximum period of ten years;
• prohibition from participating in tenders that have as their object the concession or permission of public services, in the federal public administration, direct or indirect, for a period of not less than five years; and
• disqualification to act as a director or administrator, and to hold positions in the bodies provided for in the by-laws or in the corporate charter of a legal person that operates any type of lottery, for a maximum period of 20 years.

See the second and third points listed in 11.2 Sanctions for the financial penalties to be calculated and charged by the Ministry of Finance, according to the current wording of the legislation related to sports betting (which is likely to expire in the near future).

According to the current wording of the legislation related to sports betting, which is likely to expire in the near future, personal sanctions can be applied solely or jointly with financial penalties and include the disqualification to act as a director or administrator, and to hold positions in the bodies provided for in the by-laws or in the corporate charter of a legal person that operates any type of lottery, for a maximum period of 20 years (Law No13,756/2018, Article 35-D, IX).

All gambling companies in Brazil are subject to the levy of corporate income tax (IRPJ) and social contribution on net profit (CSLL) at a combined general rate of 34%. The IRPJ rate is 15%, and a 10% surcharge applies to taxable income exceeding BRL240,000 per year. CSLL is due at a rate of 9%.

The effective tax rate may vary according to the system elected by the Brazilian legal entity to calculate IRPJ and CSLL (actual profit system or deemed profit system). Companies with total revenues greater than BRL78 million in the previous year are automatically subject to the actual profit system.

• Actual profit system – the tax basis is determined based on the accounting net profit, adjusted in accordance with the addition of non-deductible expenses and the exclusion of certain amounts. The Programme of Social Integration (PIS) and Contribution for the Financing of Social Security (COFINS) are taxed under the non-cumulative method, at the rates of 1.65% and 7.6% respectively, allowing credits from acquisitions.
• Deemed profit system – the tax basis for services is 32% on the company’s gross revenues, on an accrual or cash basis. PIS and COFINS are taxed under the cumulative method, at the rates of 0.65% and 3% respectively, not allowing credits.

Besides the ordinary corporate taxes, gambling companies’ activities are also subject to the following taxes.

Instant Lottery – LOTEX

Taxation on the operator

The LOTEX operator’s gross revenue is 18.3% of the total sales. This is the tax basis for PIS (1.65%), COFINS (7.6%) and ISS (2% to 5%).

Taxation on players’ winnings

Lottery cash prizes that exceed the value of the first tier of the individual income tax monthly rate table (BRL1,903.98) are subject to income tax withholding at a rate of 30%, as set forth in Article 732, I, of Decree No 9,580 of 22 November 2018 and Article 56 of Law No 11,941 of 27 May 2009.

Prizes in goods and services are subject to income tax withholding at a rate of 20%, as set forth in Article 733 of Decree No 9,580 of 22 November 2018.

Horse-Race Betting

Taxation on horsemen’s winnings

Prizes paid to horsemen, breeders and jockeys are subject to income tax withholding at a rate of 15%, as set forth in Article 737 of Decree No 9,580 of 22 November 2018.

Taxation on players’ winnings

Bettors’ prizes are subject to income tax withholding at a rate of 30%, as set forth in Article 732, II, of Decree No 9,580 of 22 November 2018.

Sports Betting

Taxation on the operator

Law No 13,756 of 12 December 2018 established that 3% of the total online handle/turnover and 6% of the total land-based handle/turnover must be paid to public funds, social security and sports entities.

In July 2021, the original legislation on sports betting was amended by Law No 14,183/2021, which introduced taxation standards more aligned with international practices.

In July 2023, Provisional Measure No 1,182/2023 changed the taxation (which still needs to be ratified by the National Congress) to:

• Social Contribution – 0.1% in a physical environment and 0.05% in a virtual environment over the GGR;
• 0.82% for the entities indicated by the Ministry of Education over the GGR, minus Social Contribution;
• 2.55% for the Public Safety National Fund over the GGR, minus Social Contribution;
• 1.63% for the entities of the National Sports System and for Brazilian athletes linked to sports practice organisations based in the country, in return for the use of their sports nicknames, images, trade marks, brands, emblems, hymns and symbols, over the GGR, minus Social Contribution; and
• 3% for the Ministry of Sports over the GGR, minus Social Contribution.

Taxation on players’ winnings

Fixed-odds sports-betting lottery cash prizes that exceed the value of the first tier of the individual income tax monthly rate table (BRL2,112) are subject to income tax withholding at a rate of 30%, as set forth in Article 732, I, of Decree No 9,580 of 22 November 2018 and Article 56 of Law No 11,941 of 27 May 2009.

Poker

Taxation on the operator

The taxation applies as follows.

• Tournaments – the operator’s gross revenue is the total of the tournament’s entry fees minus the amount separated for the prize pool. This is the tax basis for PIS (0.65% or 1.65%), COFINS (3% or 7.6%) and ISS (2% to 5%).
• Ring games – the operator’s gross revenue is the rake collected in each hand. This is the tax basis for PIS (0.65% or 1.65%), COFINS (3% or 7.6%) and ISS (2% to 5%).

Taxation on players’ winnings

According to the RFB, when the prize depends on the performance of the participants, it is deemed as remuneration for the work, regardless of whether the prizes are paid in cash or in the form of goods and services. Therefore, if the prize is paid by a Brazilian legal entity to an individual fiscally resident in Brazil, it will be subject to personal income tax withholding calculated based on the following progressive tax rates (in Brazilian reais):

• from BRL0 up to BRL2.112 – income tax exemption, no deductible amount;
• from BRL2,112.01 up to BRL2,826.65 – 7.5% withholding tax, BRL158.40 deductible;
• from BRL2,826.66 up to BRL3,751.05 – 15% withholding tax, BRL370.40 deductible;
• from BRL3,751.06 up to BRL4,664.68 – 22.5% withholding tax, BRL651,73 deductible; and
• from BRL4,664.69 and above – 27.5% withholding tax, BRL884.98 deductible.

Law No 13,756/2018: Fixed-Odds Sports Betting

The regulation of Law No 13,756/2018 (the “Fixed-Odds Sports-Betting Law”) is expected to be completed by the end of 2023, with licences expected to be issued by the end of the first semester of 2024.

Bill of Law No 3,626/2023, which was proposed with constitutional urgency, is awaiting review by the Senate until 11 November 2023. Subsequent regulations by the executive branch are anticipated once this process is completed.

Provisional Measure No 1,182/2023, amending several provisions of the original Law No 13,756/2018, is pending analysis by the National Congress until 21 November 2023, at which point the text will either be ratified or rejected.

Law No 14,455/2022: Health and Tourism Lotteries

Law No 14,455/2022 has been passed, granting the executive the authority to establish the health and tourism lotteries. Private companies may potentially become operators of these lotteries, offering numerical predictions, sports predictions and fixed-odds sports-betting lottery games, both in physical and in virtual formats. However, currently this law is not fully operational and is facing a constitutional challenge before the Brazilian Supreme Court (STF), leaving the licensing and authorisation process uncertain.

Bill of Law No 442/1991: Comprehensive Gambling Regulation

Bill of Law No 442/1991, designed to regulate gambling comprehensively, encompassing casinos, bingos, online casinos and other games, was approved by the Chamber of Deputies in February 2022. It may be discussed in the Senate at the beginning of 2024.