Brazilian moves draw criticism
Brazilian critics, Chilean football warning, Punte del Este sale rumors, SAGSE plans, Zitro/Rush Street partnership +More.
Good morning. On this week’s agenda:
The hike to 18% tax in Brazil could defeat the government's strategy.
The minister of justice in Chile warns that football could lose its legal status by contracting with bookmakers.
Hotel and Casino Enjoy Punta del Este denies that it is for sale.
Latin America in the spotlight: SAGSE Buenos Aires.
Zitro partners with Rush Street Interactive to expand into Mexico.
The more money we come across, the more problems we see.
Tax controversy
The proposed hike to 18% tax on sports betting in Brazil comes in for criticism.
Baulked: While welcoming the signing of the provisional measure, sector voices in Brazil have warned that the tax burden imposed by the measure is too high. Arguing that it will hinder the formalization of betting businesses, critics say it could encourage the development of black markets.
The industry expected that the regulation and the tax rate would be 15% of GGR, as was originally proposed by the Ministry of Finance.
The Brazilian Institute of Responsible Gaming (IBJR) warned that the total tax burden should be around 30% after calculating other taxes.
Moreover, if taxes on the prizes paid to players are added Brazil would have one of the highest tax burdens globally for this sector, with analysts suggesting the effective tax rate could exceed 50%
Impossible targets: The Brazilian government estimated that, by regulating the betting sector, up to 87% of the current black market would be captured by the new regime. But Magnho José, editor of BNLData and founder of the Legal Gaming Institute, believes that this percentage will be impossible to reach if the tax levels as proposed are maintained.
“I think the authorities will be disappointed and surprised,” he said.
Unintended consequences: IBJR CEO André Gelfi warned that such a high tax rate could actually trigger further growth of the black market. According to Gelfi, companies that operate legally will have higher costs that will pass on to players and they will look for more attractive alternatives in the unregulated or informal market.
The president of the National Gaming and Lotteries Association (ANJL) Wesley Cardia said that taxing both betting sites and bettors’ prizes at levels that exceed 30% “can generate unwanted effects for both operators and the government”.
Arthur Silva, of the IBJR, also warned about the disincentive to investment and its consequent contribution to informality that can generate a high tax burden.
“Portugal, which practiced high fees, failed to bring half of the companies operating there to the regulated market,” he observed.
“France, which also operated at high rates, got to the point that operators surrendered their license after the 10-year agreement because it was not worth it. The illegal market ends up absorbing everything,” Silva added.
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Evangelical opposition
With God on their side.
On the offensive: The Evangelical Bench of the Chamber of Deputies is organizing a strong resistance to the provisional measure regulating sports betting in the country, led by two deputies from that parliamentary bloc, Sóstenes Cavalcante (PL-RJ) and Cezinha de Madureira (PSD-SP).
Sóstenes thinks that the government should fight gambling instead of taxing it, suggesting it is harmful, especially for pensioners and the poorest.
He added that the measure is “offensive” to the evangelical faith and stressed that it is against any kind of gambling
The Evangelical bench is made up of 130 deputies (out of 513, or slightly over 25%) and they are seeking the support of the Catholic deputies and the National Conference of Bishops of Brazil.
Next steps
Way to go: The provisional measure signed by President Lula must be approved, rejected or modified by Congress within a maximum period of 120 days. However, even with minimal modifications, that does not guarantee there will be a 100% regulated and functional betting market at the end of that road.
Indeed, online games are not explicitly mentioned in the rule under discussion, even though it has been pointed out that licensees will not be able to offer games that are not yet regulated or whose description or parameters fall outside the scope of the provisional measure.
Finally, there is no clarity on how the federated states will take the measure.
They could be subject to the executive's provisions in the regulation as adopted, or they could seek to regulate the game within their prerogatives, control the issuance and granting of operating licenses and determine their cost, or even establish other tax concepts or rates to be paid by industry operators.
A regional look
Lottery bet: Operators licensed in Rio de Janeiro will be able to market betting throughout the country. According to an update from the State Lottery of Rio de Janeiro (LOTERJ) published in the Official Gazette of the State, any operator licensed to operate in Rio will be allowed to market betting throughout the country, which will surely generate controversy.
From now on licensed operators in Rio will also be able to explore other commercial activities on their betting platform, such as strategy games, skill and other electronic games if they are compatible with federal and state legislation.
The notice updates several points of Provisional Measure No 1.182/2023, which prohibits those who have stakes in a football company or a sports organization from being part of the sports-betting operation.
The ban also applies to natural persons acting as leaders of a Brazilian sports team.
Chilean football warning
The Chilean minister of justice warns that the Professional Football Association could lose its legal status by contracting with bookmakers.
Red card: The Minister of Justice of Chile, Luis Cordero, revealed that there is an investigation against the National Association of Professional Football (ANFP) for the contracts signed with bookmakers. If any irregularities are discovered, football clubs could lose their legal status, which would mean they would cease to exist as civil associations with rights and duties.
Both the Primera División tournament and the Ascension of Chilean professional football are named after a bookmaker. According to Chile’s ADN Radio, the contracts are worth $2.5m a year.
Last week, after revealing that there is an open investigation against football clubs for “the contracts that ANFP has signed with bookmakers”, Codero announced that they will have a final resolution in the coming days.
“At some point, the department of legal personality wanted to do a face-to-face inspection, to which the ANFP objected, but finally they agreed. Legally and theoretically, it is possible for it to lose its legal personality. It will depend on the final content of the audit,” he added.
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Casino sale?
Enjoy Punta del Este Hotel and Casino denies that it is for sale.
Dreams are made of this: Speculation is mounting that Enjoy Punta del Este Hotel and Casino is for sale, with Dreams, a Chilean investor group, tipped to be on the verge of a bid.
Enjoy sold its casino property in Mendoza in Argentina last year, sparking speculation around the future of Punta del Este.
However, the current owners insist there is no formal process underway.
Enjoy bought an original stake of 45% in the property for $39m in 2013, and in 2017 they bought the remaining 55% for $189m.
According to Enjoy, the focus is on “resuming efficiency and value-generating projects that contribute to its strategic objectives, such as process automation and the implementation of technologies to directly boost revenue generation”.
SAGSE Buenos Aires
Expo puts Latin America in the spotlight.
The 32nd edition of the South American Gaming Suppliers Expo (SAGSE) will be held on March 20-21 at the Hilton Buenos Aires Hotel and Convention Center in Argentina. Event organizer Alan Burak said SAGSE offers an “extraordinary” meeting place where industry players from all over the world come together to explore innovative business opportunities and forge lasting and substantial connections.
The attractiveness of the gambling and sports-betting industry in Latin America is twofold: to the dizzying growth of the sector is added the richness of culture and its passionate community of gamblers.
In this sense, SAGSE seeks to become the catalyst for this energy to promote collaboration, innovation and knowledge sharing.
Zitro/RSI
Zitro partners with Rush Street Interactive to expand in Mexico through RushBet.
Mexican expansion: Zitro Digital has expanded its reach into the Mexican market and is now live providing its portfolio of games through RushBet. The partnership includes the integration of titles such as Link King, Link Me, 88 Link, Bashiba Link, Pick & Win, as well as the company’s collection of video bingo games.
José Javier Martí, COO of Zitro Digital, said Rush Street has been instrumental in bringing its games to Latin America, first to Colombia and now Mexico.
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At a glance
Margarita Cruz joins Digitain to strengthen its C-Suite: Digitain confirmed last week the appointment of Margarita Cruz as senior sales director. Cruz has more than two decades of experience in senior commercial positions at companies in North America, Latin America and Europe.
El Salvador holds a new solidarity draw with a first prize of $350k: El Salvador's National Beneficence Lottery (LNB) held a draw dedicated to FUNDAGEO, the foundation for the development of communities close to LaGeo's power plants and geothermal fields in El Salvador.
Global Business Company of Peru’s positive reaction: The CEO of Global Business Company of Peru, Jonathan Félix, said he considers the enactment of online gambling legislation in August last year was very positive for Peru.
“It put it on the global showcase and attracted the interest of investors and international companies, positioning it as one of the seven most attractive markets to develop business in the region, along with Brazil, Mexico, Argentina, Colombia, Venezuela and Chile,” he said.
Publishing schedule
This is the English translation of the LosIngresos+Mas newsletter published yesterday (3 August).
An +More Media publication.
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