Brazilian Soccer Teams Request Tax Implications for Sports Betting

Brazil’s Finance Minister, Fernando Haddad, recently announced a scheme to impose a tax on sports betting operators, which could be a precursor to the full legalization of the activity. This initiative has prompted operators to call for a discussion of the plan, and now several soccer clubs have also requested to be included.

Eight of Brazil’s premier football teams have sent a formal letter to the federal government, requesting to be included in the development of policies and regulations concerning online betting. Notable clubs like Corinthians FC, Flamengo FC, Palmeiras, and São Paulo FC are among the signatories, as they are among the wealthiest in the nation.

Bookmakers based in Brazil, which support the top 20 teams, are currently operating from other countries due to the government’s lack of regulation on the platforms. However, the teams want to be able to gain a significant share of the revenue if this changes.

Brazil Losing Billions of Dollars

On Monday, in an interview with Globo News, Haddad stated that the sports betting tax could generate an annual revenue of BRL 12 to 15 billion (US$2.3 to 3 billion). This is twice the amount that had initially been estimated.

Due to the fact that sports betting is not completely legal in Brazil, this potential revenue is not currently benefiting the country. Last year, attempts to address this issue were unsuccessful.

The presidential decree given to the Ministry of Finance, which was intended to last until December 13 of last year, was meant to introduce regulations surrounding sports betting. However, no progress had been made by this time.

Now that Haddad is taking action, the development of an economic strategy necessitates input from all levels of the betting industry. In the letter sent to the government, the clubs asserted that they need a “direct participation in legislative discussions” that address the regulation of sports betting.

This is partly due to the financial implications of the tax, but also because of the clubs’ intellectual property (IP) rights. The teams believe that they should be given the opportunity to provide their input on the regulations, as bookmakers are currently utilizing their IP in advertising and other marketing strategies.

Show Us The Money

The Ministry of Finance is aware of what they can expect from the soccer teams as they demand to be involved in the process. They have already faced criticism from the Brazilian Football Confederation (CBF), who wants a larger portion of the revenue generated by the upcoming sports betting tax.

The CBF stated that companies that authorize their brands for government-led lotteries are given 1.63% of the net revenue. However, the CBF wants at least 4% of the gross revenue.

Before the tax can be implemented, there is still much work to be done. Legislators have to figure out how to regulate the industry, which is also causing issues.

The provisional sports betting measure could prohibit betting sites from sponsoring soccer clubs, championships or sports entities if those operators don’t have a headquarters in Brazil. At present, 10 betting companies are sponsoring 19 of the 20 teams in Serie A of the Brazilian Championship, most of which are based in places like Malta, Curacao and Cyprus.

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