Restricted Casinos in Brazil
Already this year the gambling business in Brazil can be re-legalized after a ban lasting 70 years – the authorities are looking for new ways to replenish the budget and cope with the deficit. Large world operators of casinos and totes are already showing interest in the new market.
“The opening of the Brazilian gambling market may become one of the most significant events in the history of gambling,” the British bookmaker William Hill said in a statement. In addition to William Hill, Ladbrokes, MGM Resorts International, Swedish Betsson and NetEnt also announced their interest in entering the Brazilian market in case of legalization. In Ladbrokes the huge potential of the football tote in Brazil is seen, whose population is traditionally fond of this sport. Show more
According to the lawyer from San Paulo, Luis Maya, many transnational gambling companies are already discussing the terms of partnership with local firms and even enter into preliminary agreements.
According to the Institute of legalization of the gambling business of Brazil (IJL), if the gambling industry usually accounts for about 1% of the country’s GDP, then in Brazil this market can reach 55 billion reais (about $ 17 billion). “In Brazil, gambling has always been taboo, and in other countries of the world it is a whole entertainment industry,” says IJL President Manjo Jose Santos de Sousa and adds that now Brazil annually receives less than 6 billion reais ($ 1.8 billion) of taxes due to Underground gambling business, which is estimated at 20 billion reais ($ 6 billion).
Brazil declared the gambling business illegal in 1941. Five years later, President Eureka Dutra issued a decree to close all casinos in the country. Only state lotteries, poker and betting on races remained legal. In the 1990-s the authorities again allowed the lottery, decided to finance the development of sports at their expense. But lotteries were used to launder money, and in 2007 the Supreme Court of Brazil again banned them.
Now both chambers of the Brazilian parliament are discussing laws that will oblige foreign casino operators to cooperate with local partners, and will determine how many casinos a single company can open in the country. The acceptance of bets via the Internet can remain under the ban – the authorities are afraid of people’s dependence on such games.
After the amendments to the legislation are adopted by the Congress, they must be signed by the president of the country. According to Maya, this may happen already this year, but a more likely period is the beginning of 2017. However, the president can speed up the process – the government can’t find other sources of financing a budget deficit exceeding 10% of Brazil’s GDP. According to analysts’ forecasts, in the casino sphere in Brazil foreign operators will dominate, and in the sphere of sports sweepstakes there will be a fierce struggle between local companies. However, much will depend on the level of taxation: IJL believes that taxes should correspond to the world average level of 30% for bets taken in real form, and lower for online operators.
According to NetEnt CEO Per Eriksson, the optimal level for online operators would be a tax level of 15-20%.
The legalization of the gambling business is likely to please even the local mafia, says Santos de Souza of IJL. According to the results of the research conducted in 2014, every ninth underground operator was in favor of legalization. Paying taxes ultimately goes cheaper than bribes to policemen and officials, the expert is sure. Show less
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