Considering the scenario of local budget crisis, it is important to emphasize the discussion about the regulation of online betting, an activity that could characterize a new and relevant source of income for the country. Senate Bill 186/2014, which is currently being debated in the House Constitution and Justice Commission, is the perfect stage for such a discussion.
But if online betting is illegal in Brazil, how does such business enjoy wide publicity? It occurs that the servers of the betting sites are located in foreign countries, where bets are regulated and therefore are not illegal.
When a Brazilian citizen places a bet on a website whose server is located in another country, he is doing a business outside the limits of the Brazilian jurisdiction and is of course sending the respective value to other countries. So, there is great difficulty for the Brazilian State to reach such companies for tax purposes.
Regulation of the online betting business in Europe has led to an immediate tax effect on that continent.
In any case, it is a fact that the Brazilian bettor is carrying out an "import of services", sending values abroad. In this case, the Brazilian State may require taxation at the time of remittance (like any other), even though this type of activity is, even partially, listed among the services taxable by the Municipal Tax on Services (ISS) in item 19: "Distribution and sale of tickets and other products of lottery, bingos, cards, or coupons bets, draws, prizes, including those derived from capitalization bonds and similar". Moreover, it is a fact that eventual gains of Brazilian bettors in such servers are also subject to taxation in Brazil.
By not regulating such activity, Brazil fails to collect millions in taxes.
The regulation of online betting raises a number of issues, such as the risk of money laundering and betting addiction. Some European countries have already faced the challenge of regulating this activity, such as Spain and Italy.
The aim of European online gambling regulations was to establish a regulatory framework to ensure that the activities offer their users full respect for the principles of "responsible gambling", protection of minors and prevention of fraudulent conduct, through preventive actions of awareness , intervention in economic activity, as well as through remedial actions to the possible negative effects produced by the business.
In such European countries it was decided to establish a system based on the previous obtaining of a qualification for the companies that wish to explore this type of business. In order to obtain such authorization, the companies must comply with a series of corporate, technical and financial requirements, including the need to set up mechanisms for the prevention / denunciation of "irresponsible bets", fraud and money laundering.
Among these prevention measures stands out the requirement that the alleged operator has implemented measures necessary to prevent access to the website by minors, disabled and people prohibited from gambling.
Operators should also establish technical mechanisms to detect and prevent irresponsible betting behaviors, such as setting quantitative limits on deposits, opting for self-exclusion of users and mechanisms of time control that users spend betting.
In addition, operators are required to develop a fraud prevention, money laundering and terrorist financing manual, which describes procedures and measures for the identification, detection, prevention and communication of these conduits.
Also, betting operators are required to periodically report to the competent authorities the transactions carried out on their platform and the suspensions and cancellations of accounts and users. Betting operators should also make it possible for the competent authorities to have immediate access to their internal control system, where all transaction data must be stored.
The proliferation of regulations for the online betting business in Europe has led to an immediate tax effect on that continent: the incidence of taxes on such activity, even if the respective operators do not have physical establishments in the countries concerned.
It is clear that online betting can be an important source of tax revenue in Brazil. However, it is fundamental that the legal and regulatory framework to be developed provides for mechanisms that generate security for the business and that prevent and combat its negative impacts. At this point, the regulations of some European countries should serve as an inspiration for the coming Brazilian regulation, so that their example should be discussed in the framework of Senate Bill 186/2014.
Douglas Mota, Pedro Vitor Barros and Albert Agustinoy are, respectively, partner and lawyer of Demarest Advogados; member of Cuatrecasas Spain.
Source: GMB / Valor