iGaming Daily

As kids, we all used to have a favorite toy. That toy would give us countless hours of enjoyment, of fun. We would play forever with that toy. But what happened when that toy broke? That's what's going on today in Brazil, which has already passed its regulation this year, but is already trying to break the toy.

Welcome to iGaming Daily. My name is Fernando Nott, Media Manager for SBC. And today to discuss the current situation of Brazil is with us Ricardo Assis, Editor of SBC Noticias Brasil. Ricardo, how are you today?

Ricardo Assis (01:03.138)
Hey Fer, I'm really well, really happy because of the World Cup, my team is going really well on Intuit, we're in the quarterfinals, so yeah, really happy.

Fernando Noodt (01:14.939)
not like Flamengo. Ana Maria Menezes, Business Journalist, SBC Noticias Brasil and Boca Juniors, if I may, also eliminated from the crowd workout. Ana, how are you today, despite Flamengo?

Ana Maria Menezes (01:19.897)
Man.

Ana Maria Menezes (01:31.812)
Yeah, despite Flamengo, I'm doing well. We have a lot to cover today. But we're going to have the chance to talk a bit more about the Club World Cup in the next couple of episodes. Just a spoiler for you guys. yeah, today focusing on the political part, I'm excited to talk about the news that we have here. And I hope the listeners are ready for some toy breaking.

Yeah, that's fair, I mentioned it. Yeah, it's going insane.

Fernando Noodt (02:04.398)
Yeah, but first let's...

Ricardo Assis (02:05.089)
Yeah, I just talked about the Club World Cup because... sorry. I just talked about the Club World Cup because my team is going to face Chelsea on Friday and most likely we will be eliminated, so I'm trying to take my advantage now, so...

Ana Maria Menezes (02:17.039)
Be positive!

Fernando Noodt (02:18.764)
No, he's just trying to... We all know that Raz Soymark is a Chelsea fan. I think Ricardo is saying it because Raz is a Chelsea fan. But it's okay. yeah, Konme Bolli is very well represented by Palmeiras, which only seems to lose against Boca every time we play.

Ana Maria Menezes (02:43.611)
Hahaha

Fernando Noodt (02:45.12)
unlucky we didn't play against Palmeiras this tournament. on to the news, let's first thank OptiMove, the number one CRM marketing solution for the iGaming market and sponsor of iGaming Daily. We were talking about Brazil, we were talking about the Brazilian government trying to break the toy and the toy being the iGaming industry because they have been pushing to increase taxation on the gaming industry even though it's only been a few months since the...

segment was regulated and has been operating under this new regulation. Congress has already warned the ruling party that they will not support the push to increase taxation.

Ricardo Assis (03:28.105)
Yeah, so two weeks ago the Chamber of Deputies has approved a proposal that overturned three decrees that were issued by President Lula that were to increase the tax on financial operations. This was really big and it was strange because even the government base voted against it because some of the people that should vote for should vote to approve it voted against, which was really odd, but it was then approved by the Senate.

So, according to a report by the Valor Econômico, a really big journal here in Brazil, this will not be the only defeat that the government will face. after this three decreases were issued by Lula, they backed a little bit down and issued a provisional measure that was aimed to correct some distortions and was a little bit less intense.

a little bit a little bit a little sorry

It was a little bit less... The tax raise was little bit lower, so the Chamber of Deputies gave a little bit of a positive sign to this, but the morning after this agreement was announced, the Speaker of the House, is Hugo Mota, has said that there was no commitment for the Congress to approve this measure. And the thing is that there some people in the...

routes of deputies that are saying that the government should cut down on expanding instead of raising tax because the population cannot take more raise and even the industry cannot take more raises. So some people speak on anonymity with the Valor Econômico and said that the sector cannot take more raises at this moment.

Ricardo Assis (05:31.463)
Just sorry, I lost myself a little bit here. Let me just see where I am in the text.

Ana Maria Menezes (05:39.684)
Ahem.

Ricardo Assis (05:40.478)
And besides that, the House leader said that the agreement that the government has achieved to approve this provisional measure was only between the government base and they did not get the opposition to discuss the merit. So there's that. And we have to see what's going to happen after this because...

With the situation regarding the decrease on the IOF, the government Lula has... the attorney general officer of the government Lula has gone to the Supreme Court to try to overrule this decision and approve the IOF raise. So, Lula defended the move and stated that without this move he wouldn't be able to govern.

So I believe that something similar can happen if the provisional measure isn't approved. So as we used to say here in the podcast, we have to wait and see what's gonna happen.

Fernando Noodt (06:43.138)
Yeah, despite the opposition by the Congress, the PT, the ruling party, seems to be very committed to this tax raise.

Fernando Noodt (06:54.394)
I

Ana Maria Menezes (06:55.05)
sorry. very sorry. I can't focus myself. Yeah, so Brazil's worker party, as we said, the PT, they launched a campaign by the end of June.

Ricardo Assis (06:55.917)
Sorry, it's...

Ana Maria Menezes (07:11.608)
with the message, billionaires, banks, and betting companies will have to pay more taxes. And they call it BBB, which is just Big Brother Brazil as we use it. So it's sort of like a popular name, of course, with a different meaning, but this way it could reach more people. And the main goal is to promote what they're calling a tax justice. So this would mean...

easing the burden on lower income earners and then increase it for the super rich and the super rich as they call as I already said billionaires banks and also betting companies.

Now the proposal, and this has been a promise of the government since the beginning. This is not news for the population in general, but the proposal is to exempt individuals earning up to 5,000 reais, which would be around $900 per month from income tax and also reduce the tax rate for those making between 5,000 and 7,000 reais per month.

And this is made sort of like to balance the government's books. And the plan is to raise the taxes on the wealthiest, as I already said. So those who, according to the party, have historically paid little or nothing in taxes. And the campaign also says that this marks sort of like a historic shift in how taxes are handled in Brazil. And of course, this is led by President Lula's administration, as we said. And also the PT communications secretary, Gilmar Tato,

said that five campaign videos would be released on the party social media channels and to explain and also like promote the changes and also this whole official campaign to support the tax income

Ana Maria Menezes (08:50.97)
tax-exemptual proposal is expected to be reviewed by the Congress in the second half of the year. And the reform is led by someone who we are very familiar with, which is the Finance Minister Fernando Adagio, who's someone very known to the betting industry. He's been very vocal on raising the taxes as well on trying to get as much tax income from the betting industry in the past couple of years.

So yes, pretty big news for us and we're just gonna have to hashtag wait and see how it goes.

Ricardo Assis (09:27.84)
Yeah, just regarding this tax exemption for people that earns at least... To earn... Sorry. Regarding this tax... fuck, sorry.

Regarding the tax exemption from people that earns up to $5,000, the problem is it's that really difficult to balance this in the books because over 88 % of Brazilians earns up to R $5,000, so it's a big chunk of the population. So they're trying to get money for all other sorts of revenue sorts because it's really difficult to balance.

Fernando Noodt (10:09.974)
Right. moving on to the effects that this potential tax increase could have on the industry. We have already mentioned this in previous episodes. So if you haven't been listening, you're missing out. But make sure you follow iGamingDaily. Also follow iGamingDaily on TikTok because we're on TikTok and you can see like the brief segments of the podcast. But like I said, one of the effects this may have is the shift

to illegal operations. And that's something that experts have been worrying about for some time already.

Ricardo Assis (10:48.458)
Yeah, the José Francisco Mansoor, who is a lawyer and a former special advisor to the the Minister of Finance, wrote an article to Poder 360, that's a major outlet here in Brazil, and he were highlighting that there are some two big falsehoods being repeated by the public officials here in Brazil. The first one is that online betting does not generate jobs.

And the second one is that the operators only pay 12 % in tax. So regarding the tax, José Francisco Manzur has said that if you add up all the taxes, because the 12 % is only on top of the gross gaming revenue, so they have to pay a lot of tax on top of that. So in other words, as he say, the nominal taxes owned by authorized operators could exceed 60%. So this is even without the...

18 % raise. So he was saying that if we keep up pushing raises on top of raises in Texas here on the operators, what's going to happen as he pointed out and IBJR and ANJL, the associations have pointed out, is if we keep up pushing the boundaries of this sector, we are going to break it, as you said, because we are going to push it, the operators and the bettors to the illegal market because it's

it's unsustainable in the long term to operate in a market that is so heavily taxed.

Fernando Noodt (12:21.592)
And Ricardo, very briefly, before we go to the commercial break, there's already a warning that the Congress won't pass this tax increase when it arrives in Congress. So this kind of feels like a bit of a political tug of war at this point, right?

Ricardo Assis (12:43.2)
Yeah, it's as Ana said with the propaganda that the government is doing now regarding the BBB. They are trying to make it us versus them. They are trying to point out the government is trying to do the good things and evil people or evil sectors are trying to push against it. And this is something that the PT has done several times already. This is nothing new.

But I believe that even if the Chamber of Deputies or the Senate or other... Sorry, not other, there are just the Chamber of Deputies and Senate, so... I will go back. So I believe that even if the Chamber of Deputies and the Senate won't back them with these raises, I believe there is a shot that they will try to judicialize this situation in the same way that they did with the IOF.

So they are not going to back down on that because if they back down they will have to cut expanding and next year is an electoral year so they won't cut back on expanding at this moment.

Fernando Noodt (13:52.655)
Yeah, but I'm sure there's a lot of ways to raise tax money and we will discuss that because there's the land-based casino legalization push always lingering there like and a major opportunity for Brazil to raise tax money. But we will discuss this right after this very, very brief commercial break. will be right.

Fernando Noodt (14:20.762)
So, ad break. Okay, so I think we're running a bit long there, so let's try to keep it short, like, or brief. Yeah, it's only three questions on this part, but I think we have like six, seven minutes, not more than that. Or else we'll run like to 25 minutes and we don't want that. Cool, okay, let's go.

Ricardo Assis (14:32.425)
I'll try to keep it short. Okay.

Ana Maria Menezes (14:43.735)
Okay.

Fernando Noodt (14:48.31)
And we are back with iGaming Daily and before the break we were talking about alternative ways or we mentioned alternative ways to raise tax money other than just raise the fees for the iGaming industry which has been operating for only six months under this new regulation. And the first opportunity that comes to mind of course is the land-based segment. And right now it seems to be a very big opportunity for Brazil in terms of raising tax money.

and I'm talking about of course legalizing and regulating the land-based casino industry,

Ana Maria Menezes (15:23.629)
Yeah, so the Senate might vote before July, before the July recess on a bill that the bill that legalizes the casinos being a house also Jogo do Bicho, which is a Brazilian, a very famous Brazilian numbers game and also horse race betting in physical locations. So the Senator, Irajah Abreu, who's the bill repertor.

He believes that the proposition is ready to go. We already covered and talked to him in a bunch of our events as well But right now what's more specific about this one is that according to him legalizing this type of gambling could bring up to 20 billion Which is about 3.7 billion reais Sorry dollars 3.7 billion dollars and 20 billion reais a year in tax revenue

and this money could be a huge help to the government, especially after the recent budget cuts due to the low tax collection. And the idea is to tax the money moved through betting and split the revenue between the federal government, states and also cities. And Itaja argues that letting this whole industry operate legally, as it is mostly today, means losing out on serious income that the country could benefit from.

So if we're relating to everything we talked about so far about the president Lula's government They have been struggling to push those economic measurements through the Congress and they want to boost revenue at the same time So the legalization of casinos could be a lifeline for them and they need to look to this side with a bit more of as if I can say this way with more of like

an open heart with an open heart to it because it could be the answer. So just in May alone, the tax collection from online gambling jumped from 4 million last year to over 800 million this year. So from January to May alone, the revenue from online betting went from 7 million in 2023 to over 3 billion reais in 2024. So yeah, it's a big difference.

Fernando Noodt (17:33.573)
Yeah, for sure. We have just learned the first figures of the official regulated iGaming market, which is something we have been expecting for some time because everyone was like Brazil has the opportunity to generate a Brazilian million, billion, amount of Re.I.s and now we already have the first actual figures, the first solid and actual data from

the industry as revealed by the Reseta Federal, Ricardo.

Ricardo Assis (18:10.461)
Yeah, so as Ana mentioned briefly before that, we have the first numbers, that this is really important. We were waiting for this since March or April, because they said that they were going to do trimestral releases of these numbers, but at this point they still did not publish anything. But at least the Agencia Brasil, that is the public news agency,

has published data for the Federal Revenue Service. At least we have this first... Sorry, I'll go back again because it went too long.

Ricardo Assis (18:49.771)
Sorry guys. So yeah.

Fernando Noodt (18:50.874)
It's okay.

Ricardo Assis (18:56.363)
So as Ana briefly mentioned before, we have the first numbers that were published by the Federal Revenue Service that's regarding the first five months of 2025 and we discovered that the revenue for this sector is around 3 billion reais, which is a really, really good number. And we've talked with some people from the industry to understand the importance of this review and

We talked with Rafael Marquete Marcondes, is a chief legal officer of Reito Pitaco, and he stated that the recent data released by the Federal Revenue Service shows that it is an undeniable proof that the sector has a positive impact and growing economic relevance in Brazil. So this is something that generates a positive image of the sector because people are seeing it as a punching bag.

It's easy to attack it, but when you have such big figures regarding revenue, it gives a little bit of relief on the sector.

Fernando Noodt (20:03.896)
Yes, and you don't break the toy. Let's go back to that concept. Don't break the toy because the toy is generating a lot of money that goes into the stakeholders and that money goes to the people. So don't break the toy. Let's repeat. Don't break the toy. But there's sure a lot of to discuss in Brazil because there's a very complex situation right now with all these pushes. And Ana, you had the opportunity to talk to someone that surely knows a lot about.

the Brazilian gaming industry.

Ana Maria Menezes (20:36.428)
Yes, so during the CBLI event that I attended to, I was able to talk to Reggie Zudena. So he's the Secretariat of Prices and Betting in Brazil, so the biggest regulators, we can say this way, of the gambling sector. And he decided to talk a bit with us about the potential.

numbers that we're gonna have to be released but you're just gonna have to hashtag wait and see for the official numbers to be released and we're gonna cover all that on SPC Notícias Brasil. Please just check it. We're gonna have the full coverage as always. But when I was talking to the Dana, he said that he didn't believe that the number of

betters in the illegal market was raising. He was very straight with that. And I asked him, what data do you have to support that? And he said, the data to support the sort of like less action in the illegal betting market is the amount of people going to the legal market. So this is how he mentioned that the government was looking.

positively at the regulation in this sense. And he also said that he saw 2024 as sort of like a milestone here, milestone year, especially because they had a lot of trouble getting the data and then processing it. So this was something that he said the biggest difficulty was processing the data once it was there because it's a lot of things that they have to process. So I'm very sorry about the sound.

Anaya, sorry, but daily they have to

Ana Maria Menezes (22:15.884)
daily they have to get the earnings, the losses of all bettors. So it's a lot of data to process and it's, it's a small group of people to actually look into that. But one of the biggest steps that he mentioned was the development of Sinapa, which is something pretty big for the next couple of months. And we're also going to cover it. So, which is the Brazil national betting system. It's being developed right now and the federal government invited all States and the federal district to take part of that. And 16.

have joined it's a closed group already 16 and the goal is to have the project ready by the end of the second half of 2025 and what they're discussing is basically to have a minimum so state lotteries can join this betting national system and

Joining that, those sites would still have the .bet.pr, which is something that online betting companies already have, and also a national self-exclusion platform for gamblers with problems with gambling. So we're just gonna have to hashtag winning C, and the biggest, not controversial, an answer that we wanted to have from the secretariat was about municipal lotteries. And he was very clear when he stated, there are no go.

So the understanding of the government is that municipal lotteries are not legal, which is again, hashtag wait and see because we have a bunch of national lotteries municipal lotteries. Sorry, not national municipal lotteries being released and being approved. So we don't know how it's going to go with the government saying, they should not exist based on the union on the union's decision of what a lottery is and what it's actually happening. So hashtag waiting, see as always.

Fernando Noodt (24:03.41)
Hashtag wait and see and hashtag wait and read because you can't read all about this Not only the interview with Regis Dutena the head of the regulator in Brazil But also all this information all this news as they break they will be Going live on SBC News Brazil. So make sure you are subscribed to this newsletter of SBC News Brazil also make sure to follow iGamingDaily on all Social media networks including TikTok where you'll be able to see the snippets

Ana Maria Menezes (24:06.466)
Yes.

Fernando Noodt (24:33.339)
of the show with the most important parts of every episode. And with that, we'll call this one an episode. Thank you very much, Ricardo, Ana. Thank you very much, Ania McDonnell for producing this episode. And to our listeners out there, we'll see you in the next one. Goodbye.