BRAZIL: The future of online gaming is regulation
The Brazilian Institute of Responsible Gambling (IBJR), has said maintaining iGaming Bill No. 3,626/23 is the way to avoid chaos in the Brazilian betting market
The vote on Bill 3626/2023, which regulates the online betting sector in Brazil, was scheduled to take place in the Federal Senate plenary on 12/6, but ended up being postponed once again.
Some of the Senators who spoke against the approval argue that the online gaming modality was not originally foreseen in Law 13,756/2018 and that it should be considered by the Federal Senate at another opportunity. This concern is pertinent, necessary and legitimate. However, it is necessary to clarify the effects of removing the product from regulation.
For IBJR, if it chooses not to control the iGaming sector, Brazil will be:
- Driving away serious companies from Brazil and abroad, willing to create a new segment for the country’s economy;
- Creating the perfect ecosystem for groups not interested in operating within the rules to spread;
- Giving up billion-dollar revenue and drastically impacting the sponsorship and sports promotion chain in the country;
Companies based abroad that currently offer sports betting products also have the practice of offering iGaming products, this is because 70% of customers who place sports bets are also iGaming consumers, which accounts for a relevant part of these companies’ revenues, surpassing in some cases, the range of 50%.
In other words, the natural consequence of removing iGaming from the text to be considered in the Senate is a drop in channeling. The IBJR believes that at least 50% of players should remain underground, playing in unauthorized venues, and, therefore, without generating taxes for the country, in addition to exposure to scams, gambling addiction and other potential problems.
Today, the estimated revenue (GGR) of the sector served by companies based abroad is approximately R$15 billion/year. Without iGaming revenue, the houses would generate 40% just from sports betting, that is, R$6 billion, a 60% drop in the potential market, and in the revenue base. Also considering the loss of player channels estimated at 50%, the potential domestic market would be estimated at approximately R$3 billion/year.
In other words, the tax base that the Federal Government expects to have with online games would fall from R$15 billion to R$3 billion. If we consider the rate currently predicted for sports betting of 12% of operators’ revenue, we will be talking about an estimated revenue for 2024 of a paltry R$360 million, that is, far below public expectations, and the needs of a future sustainable formal market. .
Therefore, IBJR stands with the Senators who want Brazilian society to be protected from harmful practices related to gambling and understands that the inclusion of iGaming in PL 3626/23 is the most efficient and legitimate way to formalize and organize a new sector in Brazilian economy and protect society from criminal practices.