The moderator of the panel “Update on Brazil: Delays, decisions and a race for market share” (developed entirely in English) was Christian Tirabassi (Senior Partner at Ficom Leisure), and also included André Gelfi (CEO of Suaposta) and Arthur Silva (Head of Sports Operations at Sportsbet.io).
Moderator - When do you estimate that the definitive regulation of sports betting will be ready?
Montgomery - The expectation is to have it ready by the end of the year or beginning of next one, in case of any changes to the law since it would involve Congress, and at the moment we're discussing issues related with the COVID-19 crisis and other issues like if there will be Municipal elections or not in the second half of the year.
Which do you think would be the next steps in terms of the regulatory process and which would be the best stage to succeed in terms of getting properly regulated?
The law as it stands today does mention that operators will only be licensed if they are Brazilian companies. So, foreign operators interested in coming to Brazil already need to potentially do their homework and maybe plan ahead and already start incorporating some sort of holding company or subsidiary in Brazil to be ready when the regulations are defined, with a valid tax number and bank account in order to apply for that license.
Even when the regulation is to come out, there is potentially going to be a six-month period between the enactment of the regulations and the beginning of operations in the market. I think the quicker foreign operators come to Brazil and set up, the better for them. Many operators are first waiting for the regulations to effectively come out to see what the rules of the game are first before taking that initial step. But I really recommend already setting up in Brazil to be ready for the license process. Regulation is going to come out. It is just a question of time more than if yes or no.
Do you believe that a certain point the regulation might evolve into one having a sustainable tax rate? We've been hearing about reducing from 3% to 1% of turnover?
In terms of the changes to the tax rate, the reduction from 3% to 1%, they tried including it in one of the first drafts of the decree but, as it is an administrative norm, it cannot revoke a federal law that was approved by Congress. So, any changes to the tax rate requires Congressional involvement and that's where things start to become a bit tricky. Because over the years Congress has a been more reluctant to approve laws legalizing gaming and betting all together. So, when you need to involve the Congress then that is going to take time. So, at the moment what we see is that the 3% is what will prevail for some time until another law can change that.
Another key element is the introduction of gaming products, mainly casino games, bingo and video bingo that are so strong in Brazil. Do you see this happening in a short term or maybe in phases?
The government does seem to be focused on sports betting at the moment. This is apparently what is backed as well by the President himself. I think other types of games find themselves in a more difficult situation. This environment provided by the COVID situation is ideal for the legalization of all types of gaming because they could generate more revenue, more taxes and jobs to the country. This is a great opportunity that the government is missing out, especially if it had implemented and authorization license as opposed to the concession license. Probably we would already have operators legally read to operate in Brazil and pay taxes”.
Source: GMB
