1. Introduction
The present scientific study intends to present and discuss the new Gross Gaming Revenue (GGR) taxation model brought by Law 14.183/2021 that amended Law 13.756/2018.
It is also intended to briefly address the changes and impacts that this legislative change has brought to the sports betting market. Making a comparison with other countries that have already adopted the aforementioned taxation model.
In addition, it will be discussed how the distribution of the collection of fixed-odds bets globally will be. With this, the present work aims to compare the old model of taxation (turnover) with the current GGR one. Once, that was seen as harmful to the market. Well, it keeps the big operators away, who don't want to suffer from abusive taxation.
Thus, according to international studies, the Gross Gaming Revenue is the most suitable prototype worldwide, with the best results against illegal betting and heating up the economy.
2. The gross gaming revenue (GGR) taxation model
The presidential sanction of Law 14,183/2021, which took place on 07/15/2021, amends Law 13,756/2018 (fixed-odds bets) and starts to consider the gross profit of the operation (GGR) instead of the sum of all bets made (turnover).
According to the Secretariat for Evaluation, Planning, Energy and Lottery of the Ministry of Economy (Secap/ME), this new legislation will allow Brazil to position itself in accordance with the best international practices and so that there will be an increase in revenue for the public coffers by unlocking a promising market for the country.
The head of Secap, Gustavo Guimarães, adds: “Law 14,183/2021 will allow the regulation of the market and the fight against the illegal market, which does not pay taxes, in addition to increasing revenue and aligning the country with best practices worldwide. Large international players have already sought the Secretariat interested in establishing themselves in the country.”
Guimarães states: “In the first 4 months of 2021 alone, the Federal Lotteries transferred around R$ 2.7 billion to social causes. This represents a 13% growth compared to 2020, which also increased compared to 2019. In other words, sports betting is in full swing in Brazil.”
For Waldir Eustáquio Júnior, undersecretary of Prizes and Sweepstakes at Secap, this change makes Brazil one of the biggest sports betting markets. It is expected that the regulation of this modality will take place by the end of this year 2022 - year of the World Cup -, with the beginning of the due bidding processes.
The old model (turnover) was seen as harmful for sports betting companies, where the charge was made on the gross value of bets, therefore, it brought a higher cost to bookmakers, thus making the market less advantageous.
Turnover taxation levies taxes on any and all money the operator has. So this is too bad for the market. Well, it keeps the big operators away, who don't want to suffer from abusive taxation. With this, illegal houses gain, since they do not pay taxes. And that makes the clandestine bets increase even more.
In this way, jobs are not generated, the money that would be destined to social causes is concentrated in the hands of illegal operators. Countries that have adopted turnover taxation have not had good results and have the highest rates of illegality.
With the Gross Gaming Revenue tax model, the gross revenue of the operation will be considered. That is, the gross take minus the prize paid to punters – instead of the percentage breakdown of the gross take. This change equates to the way fixed-odds betting revenue is distributed globally. Therefore, it favors a larger and more competitive market, which contributes to the privatization process.
3. Changes and impacts on the Brazilian market
This legislative change makes it possible to collect taxes from a sector that basically did not exist. Some experts also say that this change should generate more jobs, heating up the economy.
In addition, the aforementioned change can also set precedents for other practices, such as investing in Forex, which is trading currencies, using forex brokers, where when acquiring a currency for a certain value, the user can wait to trade it after its appreciation in order to make a profit. In addition, from the GGR taxation, the division will be made as follows:
The total amount collected will be allocated first to the payment of the prizes, the levied income tax (30%, in the prizes above the exemption limit) and the social security portion (0.10% for physical bets and 0.05% for those in virtual environment). The remainder will be allocated to public schools for Early Childhood Education, Elementary Education and Secondary Education that have reached the goals established for the results of the national assessments of Basic Education (0.82%); the National Public Security Fund (FNSP) (2.55%); clubs that cede the rights to use their names, brands, badges, anthems and symbols for the dissemination and execution of the lottery (1.63%), and to lottery operators (95%, at most), to cover costing and maintenance.
A study carried out by the PWC Gaming Center of Excellence, located in London, showed that the GGR model is the most viable and with the best financial return to public coffers. Countries with this type of taxation are the ones that achieved the best results, because only this model can generate a sustainable market. It generates jobs, eliminates illegal betting and heats up the economy.
Final considerations
In this scientific article, Law 14,183/2021 was presented, which amended Law 13,756/2018 and changed the taxation model to Gross Gaming Revenue (GGR), where it started to consider the gross profit of the operation instead of the sum of all bets made (turnover).
It showed that the new legislation will allow Brazil to position itself to the best international practices and for there to be an increase in collection for the public coffers by unlocking a promising market for the country.
Analyzed the Gross Gaming Revenue taxation model, and how it favors a larger and more competitive market, which contributes to the privatization process. In addition to being the most viable and with the best financial return to the public coffers.
It clarified that the old model (turnover) was seen as harmful to sports betting companies, where the charge was made on the gross value of the bets, therefore, it brought a higher cost to the bookmakers, thus making the market less advantageous.
However, this work addressed some changes and impacts that the Brazilian market will have with this new taxation model. Which are: more jobs and heating up the economy. In addition to setting precedents for other practices, such as investing in Forex.
Therefore, it is concluded that countries with this type of taxation are the ones that achieved the best results, because only this model can generate a sustainable market. Since, it generates jobs, eliminates illegal betting and heats up the economy.
Rafaelle Amorim
Attorney. Scientific Researcher. Academic Advisor and Advisor. She has works published in magazines and newspapers with wide circulation.
