Status of the Regulation Process in Brazil - Luiz Felipe Maia London, February 5, 2018 - ICE London!

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Status of the Regulation Process in Brazil - Luiz Felipe Maia London, February 5, 2018 - ICE London!
Status of the Regulation Process in Brazil

London, February 5, 2018.

                            Luiz Felipe Maia
Status of the Regulation Process in Brazil - Luiz Felipe Maia London, February 5, 2018 - ICE London!
The Regulation Process
Status of the Regulation Process in Brazil - Luiz Felipe Maia London, February 5, 2018 - ICE London!
The Regulation Process – Status in the Senate
SENATE BILL NO. 186/2014
• Introduced into the Senate in May 2014.
• In September 2015, the bill was referred to the Senate’s Special Committee on National
  Development. In December 2015 the committee approved the bill.
• In August 2016 the bill was assigned to a new sponsor, Senator Fernando Bezerra Coelho,
  and it was reassigned to the special committee.
• In November 2016 a new version of Senate Bill no. 186/2014 was approved by the
  Special Committee
• The bill was then submitted to the Justice and Constitution Commission of the Senate.
• At the Justice and Constitution Commission the bill was assigned to a new sponsor,
  Senator Benedito de Lira, who presented a new version of the bill. This is expected to be
  voted by the Commission in February, 2018, and then submitted to the plenary of the
  Senate.
Status of the Regulation Process in Brazil - Luiz Felipe Maia London, February 5, 2018 - ICE London!
The Regulation Process – Status in the Chamber
CHAMBER BILL NO. 442/1991
In June 2015, a special commission was also created within the Chamber of Deputies to
assess gambling legislation in the country.
In June 2016, after one year of public hearings and discussion, Deputy Guilherme Mussi
proposed an entirely new draft legislation, which was amended and then approved by the
commission in August 2016.
The approved bill provides for an expanded regulation of different gambling activities. It
would regulate casinos, bingo halls, lottery games, jogo do bicho, fixed-odds betting, online
gambling and horseracing, while allowing gaming machines in casinos and in gaming halls,
with video bingo machines allowed in bingo halls, racetracks and football stadiums.
This bill will now be analysed and voted on by the plenary of the Chamber of Deputies.
Status of the Regulation Process in Brazil - Luiz Felipe Maia London, February 5, 2018 - ICE London!
Overview of the Bills
                                  Bill of Law 442/1991                                                Bill of Law 186/2014
Origin       Chamber of Deputies                                              Senate
Status       Approved by the Special Commission                               New draft proposed by the rapporteur, Senator Benedito de Lira
Next steps   Voting in the Chamber to be scheduled                            To be scheduled for voted at the CCJ
Modalities   •    Casinos                                                     The law regulates all games of chance ("Jogos de Fortuna"), defined
             •    Bingos                                                        as the games which result depends exclusively or mainly on a
             •    Fixed-odds sports betting                                     future and aleatory event. The law explicitly provides for:
             •    VLTs                                                        •     Jogo do Bicho
             •    Online Gaming                                               •     Video-Bingo (Class II machines) and video-jogo (VLTs), both
             •    Lotteries                                                         land-based and online
             •    Jogo do Bicho                                               •     Bingos
                                                                              •     Casino resorts
                                                                              •     Sports betting and other non-sports related types of betting,
                                                                                    both land-based and online
                                                                              •     Online casino games
Licenses     •    Casinos: public bid for concession – 30-year term,          All gaming modalities must be approved by the Federal Government
                  renewable for equal terms                                   •     Casinos, sports betting and online games are licensed by the
             •    Bingos: authorization for 20 years, renewable for one equal       Federal Government;
                  term                                                        •     Bingos are licensed by the States and the Federal District; and
             •    Jogo do bicho: BRL 5, MM minimum paid-up capital.           •     Jogo do Bicho and VLTs are licensed by the Municipalities.
                  Unlimited time license.                                     The procedures and criteria for licensing are to be determined by
             •    Lotteries: States may have bids for concession of lottery   future regulation.
                  services with 20-year term.
             •    Online Gaming: not defined.
             •    VLT: BRL 20 MM minimum paid-up capital. Type of license
                  not defined.
Status of the Regulation Process in Brazil - Luiz Felipe Maia London, February 5, 2018 - ICE London!
Overview of the Bills
                                     Bill of Law 442/1991                                                   Bill of Law 186/2014
Requirements   •   Operator must be a company incorporated under the laws                 Operator must be organized as a company incorporated
                   of Brazil, with headquarters and management in the country             under the laws of Brazil, with headquarters and
               •   Technical capacity                                                     management in the country and prove:
               •   Fiscal regularity                                                •   Fiscal regularity
               •   Financial and economic integrity                                 •   Financial integrity
               •   Final individual shareholders must be identified                 •   Shareholders, officers and managers cannot have been
               •   Shareholders, directors and managers shall not have a                convicted for crimes nor be an elective officer, spouse or
                   criminal record                                                      relative.
               •   Gaming incorporations shall not be shareholders, managers        •   Public officials and relatives cannot be part of companies
                   or directors                                                         operating games of chance in Brazil
                                                                                    •   All gaming licenses will be granted through a standard
                                                                                        contract, followed by a public announcement procedure ad, if
                                                                                        applicable, a public procurement process to be determined by
                                                                                        the regulation.
               •   1 Casino in States with population up to 15 (fifteen) million;   •   The license can be granted upon payment and shall be granted
 Casinos           2 Casinos in States with population between 15 (fifteen) and         for 30-years from the beginning of the operation.
                   25 (twenty-five) million; and 3 Casinos in States with           •   Casinos shall be located at resorts, with high standard hotel
                   population is larger than 25 (twenty five) million.                  accommodations, areas designed to host meetings and social,
               •   Only 1 license per State for each economic group and up to           cultural and artistical events, bars and restaurants and
                   5 licenses in the National territory.                                shopping centers.
               •   Minimum size and number of rooms requirements based on           •   The casino shall not occupy more than ten percent (10%) of
                   the population of the State.                                         the resort area.
               •   Bid for licenses, valid for 30 years, renewable for equal        •   The same economic group cannot explore more than three (3)
                   terms.                                                               casinos in integrated leisure complexes.
               •   Slot machines must have a minimum payout of 80%.
Overview of the Bills
                                     Bill of Law 442/1991                                               Bill of Law 186/2014
Bingos         •   Allowed at bingo halls, jockey clubs and soccer stadiums.   •    Authorized only one bingo hall per 150k inhabitants. In cities
               •   Minimum size and paid-up capital requirements based on           with less than 150k inhabitants, only one bingo hall shall be
                   the population of the city.                                      authorized.
               •   Only videobingo machines are allowed, with a minimum        •    Bingo shall only be explored in bingo halls, in a human-contact
                   payout of 80%. Slots are not permitted.                          free procedure, and with a closed TV and sound circuit.
               •   Up to 500 machines per bingo hall and 300 in soccer         •    Prizes shall be paid only in cash.
                   stadiums and jockey clubs.                                  •    Other than bingo only videobingo machines are allowed at the
               •   Licenses valid for 20 years, renewable for equal terms           Bingo hall and the minimum payout shall be 80% of the handle
                                                                                    per terminal.
                                                                               •    Licenses shall be granted for 20 years’ time and can be
                                                                                    renewed for the same period.
Fixed-odds     •   Licensing subject to further regulation                     •    Fixed-odds Sports or non-Sports Betting can be operated both
Sports or non- •   Central Server must be in Brazil                                 land-based or online.
Sports Betting                                                                 •    The central server must be located in Brazil
                                                                               •    Details subject to further regulation.
Jogo do Bicho •    Minimum paid-up capital of BRL 5MM                          •    Licenses shall only be granted for entities that prove to have a
and VLTs      •    License shall be valid for undetermined term                     reserve of funds in guarantee for payment of the obligations
              •    VLTs are named BR1 Machines and can operated by                  and duties arising from the Law.
                   companies with a minimum paid-up capital of BRL 20MM, at •       Licenses shall be valid for 10 years and shall be restricted to
                   small places with 5-10 machines, locates at least 500 meters     the municipal territory.
                   from bingo halls and 2,000 meters from casinos.              •   VLTs are authorized only at the casinos and videobingo at
                                                                                    Bingo halls.
Lotteries      •   Only Federal and State-owned lotteries are authorized.      •    State lotteries ate granted the same rights granted by law to
                                                                                    the federal lottery.
Poker          •   Classified as a game of skill.                              •    Classified as a game of skill.
               •   Not subject to the law                                      •    Not subject to the law
Overview of the Bills
                                     Bill of Law 442/1991                                             Bill of Law 186/2014
AML            •    All operations over BRL 10k must be identified.            •   All operations must be identified through player’s CPF or
                                                                                   Passport.
                                                                               •   All prizes over BRL 10,000.00 must be informed to the Federal
                                                                                   Government.
Taxation       •    PIS/COFINS social contributions: 3.65% on GGR              New Gaming Tax – paid monthly:
               •    Ordinary corporate taxes (±34% of the net profit)          •   10% on GGR for land-based operations
                                                                               •   15% on GGR for online operations

                                                                              Other Taxes:
                                                                              •    PIS/COFINS social contributions: 3.65%.
                                                                              •    Corporate taxes (±34% of the net profit)
                                                                              •    Services Tax (2% - 5% on GGR)
Tax on Player’s •   15% withholding tax on actual gains at the time of the    •    15% withholding tax on net prizes at the time of the
 Winnings           withdrawal or payment.                                         withdrawal or payment.
Responsible     •   Obligation to create a responsible gaming plan            •    Educative campaigns to alert the risks of gaming and stimulate
 Gaming         •   National Registration of Problem Gamblers                      support groups.
                                                                              •    Prohibition of addicted persons registered on a record to
                                                                                   gamble.
                                                                              •    Operators are not allowed to give credits or loans of any kind
                                                                                   to players.
Regulatory     •    The Federal Government must to enact another law creating •    Not included. The control, regulation, and inspection will be
 Agency             the agency                                                     performed by a department/organ/secretary of the Federal,
                                                                                   State and Municipal Governments, to be defined by the
                                                                                   regulation.
Luiz Felipe Maia
maia@fymsa.com.br
+55 11 98744-5555

Alameda Ministro Rocha Azevedo, 456, sl. 1102
São Paulo – SP | Brasil
Tel/Fax: +55 11 2157-5025

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