Games Magazine Brasil - What were the first repercussions received from the local and international market about the presented draft? What are your real expectations for the collection of Brazil based on the numbers you’ve been working with?
Alexandre Manoel - The repercussions were the best possible. The international and domestic market of fixed-odd sportsbook operators has shown a great willingness to contribute to the regulation and the proposed model has been well accepted.
Regarding the expected collection, we believe that this lottery modality should move between R$4 billion (US$ 965m) and R$ 6 billion (US$ 1.45bn) per year during the first years of implementation. However, unlike traditional lottery modalities, such as numerical predictive mode, fixed-odds sports betting must operate at much higher percentages of prize money to be attractive and mitigate illegal gambling, which leads to a lower percentage of its total revenue for the government.
In this sense, with a government allocation of 1% on revenues, as we are proposing, the Federal Government should raise directly between R$ 40 million (US$ 9.65m) to R$ 60 million (US$ 14.45m) per year.
You have anticipated the amounts of the authorization fees, monthly fees and taxes on the games at CBF Football Expo, but the draft presented does not contain this useful data for calculating the business scope. Why were they not included? Do you believe that the tax values you mentioned at Expo will change or even could any of these taxes be eliminated?
Like the criminal clauses, these values were not included because they are a subject of legal matter; will be exposed in the future amendment of Law No. 13.756 / 2018. At first, they will be the same as those presented at the CBF Football Expo. I do not believe that the values of taxes spoken at Expo will change or be eliminated.
What were the basis to choose to charge a 1% tax on revenue rather than GGR as most markets do? IBIA, for example, an institute that brings together the largest operators in the world, opposed to this option ...
Fixed odds sports betting has been approved as a lottery mode, which, in addition to Turf, is the only legally permitted "play with bet" mode in Brazil. In this sense, since it is a lottery modality, we need to make explicit in the law the portion of the total collection that should be allocated to the government. Given that the operator will have the flexibility to choose which portion of the award and which will remain to cover cost and maintenance expenses, provided that together they do not exceed 99% of the total collection, the choice of 1% for the government is equivalent to applying a 15% to 20% taxation at the Gross Gaming Revenue (GGR), in line with international best practices.
Brazilian media recently warned that sports betting regulation could suspend sponsorship of football clubs ... is that right or can you deny that version?
There is no chance that sports betting regulation will suspend the sponsorship of football clubs. We want that, with regulation, such sponsoring companies become legal companies in Brazil and can operate within regulatory standards.
Is Brazil's model more like those of the American states than the European countries? Why? And how would they be compared with the models chosen by other Latin American countries?
We can say that the proposed model is based more on the European market, since it was the cradle of fixed-odd sports betting and is in a more mature stage, having several experiences of calibration in the taxation issues, besides being advanced in the consolidation of responsible gambling practices and prevention of manipulation of results. We aim to be a reference for Latin America.
Many local and international operators are awaiting regulation to comply with what Brazil asks them to do, but at the same time they are already operating with Brazilian gamblers in what is considered a “gray market”. However, the decree states that if they have previously worked in unregulated markets, they will not be granted a license. There arises a certain confusion and fear of the companies. Can you better explain what will happen to them?
Let's make this clearer from the contributions. However, the idea is that those who operate in regulated markets must prove that they are legal in those markets. In the Brazilian case, the market is not yet regulated.
From the original decree signed by former President Temer, the amounts intended for Social Security and the FNSP haven been considerably reduced. Don't you fear that this will complicate congressional approval or generate criticism from ministers Paulo Guedes or Sergio Moro?
Today, there is no fixed odds sports betting. What we are proposing is something to make this modality viable and mitigate the illegal operation; Reducing the proposed percentage of total revenue does not necessarily imply reducing the amount earmarked for such government beneficiaries. There should be no criticism, because the choice is between having nothing and having something.
What changes exactly have to be made in Congress for the decree to move on, and when do you believe lawmakers will receive the final draft to address the changes you have requested?
Essentially, we envision three significant changes: i) change in the percentages of government destination, awards and operation, previously provided for in Law No. 13,756 / 2018, which will allow the operator to offer attractive prizes and, at the same time, have an adequate taxation on GGR; ii) inclusion of criminal items containing criminalization of conduct, which may allow the typification of criminal conduct, thus avoiding money laundering, manipulation of results and fraud, preserving legality; and iii) definition of the destination of the prescribed prizes amounts, which is silent on Law No. 13,756 / 2018.
You have released a video where you ask Congress for help to come up with the topic. Did you do this because you foresee difficulties in Brasilia to approve what is needed? Have you been talking with some members from your Secretariat to feel their positions on the subject?
The video was a request from the Ministry of Economy's Communication Office; therefore, it is an institutional video, published to call on experts, operators and even potential gamblers to effectively contribute to the regulation of fixed odds sports betting. As it is a topic of great popular appeal, of innovative character and that will bring opportunities for various segments in the Brazilian labor market, I do not see any difficulty in dealing with this issue in the National Congress. Once we have finalized the process of public consultation and consolidation of contributions received, this matter should be discussed with parliamentarians in order to continue the regulation.
There is only one quarter left for the end of this year. Do you trust that 2019 will end with the approved decree?
At Secap, we have been working with focus and determination, and we will strive to approve the decree this year. Its viable. However, there are some steps (including changes to the law) that will not depend solely on our efforts.
Source: Games Magazine Brasil
