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July 28, 2023

Brazil publishes Provisional Measure to regulate taxation of fixed-odds sports betting

  • A new regulation on fixed-odds sports betting is expected to significantly affect the Brazilian market.
  • This Tax Alert highlights aspects of the measure, including certain tax implications for operators.
  • Interested parties will need to carefully monitor developments, such as any changes made as the measure is converted into law and the issuance of further regulations.

On 25 July 2023, the Brazilian Government published Provisional Measure (PM) 1,182/2023 (dated 24 July 2023) (PM 1,182), which has the effect of regulating the commercialization of fixed-odds sports betting in Brazil. The impact of this regulation will be significant for the Brazilian market, which is currently attended by foreign operators.


In 2018, Law No. 13.756/2018 legalized fixed-odds sports betting in Brazil. However, the legislation required that the Ministry of Finance issue regulations in relation to the provisions within two years, extendable for up to an equal period, from the date of publication. While the relevant legislation underwent amendments in 2021, the regulations were not issued during the (maximum four-year) period, which lapsed in December 2022.

With the publication of PM 1,182 (amending Law No. 13.756/2018), some of the questions regarding regulation have been answered — even though further regulation from the Ministry of Finance will be required for companies to understand the full impact and process to operate in Brazil. Some key points raised by PM 1,182 include:

  • A lottery modality for fixed-odds betting is authorized, treated as a form of a public service, removing previous wording providing that this was exclusive for the Federal Government or Uniao — effectively, permitting the Ministry of Finance to administer such activities.
  • The fixed-odds license will be granted, permitted or authorized by the Ministry of Finance and will be operated exclusively in a competitive environment. PM 1,182 clarified that this would be on an onerous (i.e., chargeable) basis, without limitation on the number of grants (subject to a future regulation of the Ministry of Economy). The authorization fee and period of validity were not included in the PM.
  • Both national or foreigner entities may apply for authorization to operate, provided they are duly established in Brazil and meet the requirements contained in the regulations of the Ministry of Finance.
  • New definitions are introduced for important terms necessary to determine the scope of the events and bets contemplated, such as the definitions of "real sports-themed events," "fixed-odds," etc.
  • Rules are introduced prohibiting certain people from betting (e.g., minors as well as persons who may influence the result of the relevant event, such as athletes) and prohibiting nonauthorized operators from taking bets. Advertising by nonauthorized operators is also prohibited. Those affected include current offshore betting operators that provide sponsorships in Brazil and may be impacted during the period that any local authorization is being requested (and pending approval).
  • Restrictions are imposed in relation to transmissions and reproduction of sport events, and claim periods; certain additional information is provided regarding disclosure obligations and associated fines and penalties for noncompliance.
  • The rules require that only financial institutions authorized by the Brazilian Central Bank (BACEN) may offer transactional accounts allowing betting payments and prizes and the BACEN will regulate payment arrangements to prevent payments aimed at allowing fixed-odds bets by unauthorized operators.

PM 1,182 also amends how the proceeds from the collection of the fixed-odds bets (via physical or online platforms) should be allocated. More specifically:

  1. Payment of prizes
  2. Payment of income tax on the prizes, collected via withholding tax at the rate of 30%, respecting the exemption range applicable to individuals, currently increased to 2,112 Brazilian Real (BRL 2,1120 (approximately USD 445), as per PM 1,171/2023, otherwise BRL 1,903.98 (approximately USD 400)
  3. On the difference between the amounts received and the payments of prizes and associated income tax (globally referred to as gross gaming revenue or GGR), companies should collect the following taxes/contributions — 18% in total:
    • 10% contribution to social security
    • 0.82% to funding basic education
    • 2.55% to National Fund of Public Security (FNSP)
    • 1.63% for the National Sports System (i.e., clubs and athletes that have names and symbols connected with bets)
    • 3% for the Ministry of Sports (until 24 July 2028, when it will revert to the Treasury)
  4. 82% of the GGR should be allocated to cover the cost and maintenance expenses of the operating agent of the fixed-odds sports betting

In terms of effectiveness, PM 1,182 considers:

  • The new contributions to social security will apply from the first day of the fourth month after publication, when the previous provision allocating values to social security will also be revoked.
  • Provisions addressing lack of compliance with the legislation will apply from the effective date of the regulations of the Ministry of Finance that make it possible for companies to present a request for authorization.
  • Other provisions apply as of the date of publication.

It should be noted that a PM is a provisionary law issued by the executive branch of the Brazilian Government and has the authority of law until it is acted upon by the Brazilian Congress within a prescribed 60-day period. If Congress does not act within this initial period, then the measure expires unless extended for one additional 60-day period. As such, a discussion may arise in relation to the validity and effectiveness of the provisions to the extent that there is a delay in relation to the conversion of the PM into law.

Takeaways and next steps

Some key takeaways and next steps:

  • The 18% tax rate over GGR does not address other corporate and indirect taxes and contributions that Brazilian entities may be subject to in Brazil (at the Federal and municipal levels). The technical application and administrative aspects of these other taxes may also need to be revisited during the process of conversion of the PM.
  • Other specific technical questions remain in relation to the taxes contemplated. For example, PM 1,182 does not address the possibility of compensation of betting losses against betting prizes and/or consolidating prizes for the purposes of the exemption, nor the mechanics and timing for collection of the tax on prizes.
  • Existing nonresident operators will need to react quickly to ensure they have their presence established in Brazil to be able to make the relevant approval request, once the applicable regulations are released.
  • Interested parties will need to carefully monitor developments in relation to the issuance of the relevant regulation by the Ministry of Finance and the conversion into law of PM 1,182 (as well as any adjustments to the text during the conversion process).


For additional information with respect to this Alert, please contact the following:

EY Assessoria Empresarial Ltda, São Paulo

Ernst & Young LLP (United States), Latin American Business Center, New York

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific

Published by NTD's Tax Technical Knowledge Services group; Carolyn Wright, legal editor


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