The principal item this month is the impending vote by Brazil’s Lower House Special Gaming Commission, due at the end of June or beginning of July. The Special Commission’s parallel in the Senate, which has a different project, still has not indicated intention or a voting date, although this should not be much further into July, either.
Special Committee of Representatives
ready to vote on Casino Law
The Special Committee of the House of Representatives is ready to vote on Bill (PL442/91) that legalizes and regulates gaming in casinos, Jogo do bicho and bingo halls in Brazil, including the operation of video bingo machines and slot machines in casinos in integrated resorts.
Rep. Guillherme Mussi, who has been heavily criticised for restrictions on his proposed bill, said: “We are open to suggestions and changes. Of course there are divergent points, but I believe that most of the (gaming) segments are contemplated.”
Bill proposal eliminates slots games online and sports betting
In his report of Tuesday, June 21, Rep. Mussi, left out slots games, online gaming and sports betting. In a quite detailed report which defined gambling in Brazil as “games of Fortune”, Mussi followed Portugal’s example.
The Representative’s report of 29-pages made reference to all the 14 previous bills that proposed the regulatory gaming framework for the country, analysing in detail the result of all public hearings held by the Special Commission during the past 11 months. Also, the report included all voting decisions explaining the concepts used in the elaboration of the gaming white paper presented to the Special Commission.
Proposed legislation is ‘insufficient’
Immediately Brazilian gaming media BLN reported on Mussi’s proposal, calling it ‘insufficient’ after making a close analysis of the white paper, adding that representative Mussi, showed ‘lack of knowledge of the gaming market of Brazil and the way other countries face the gaming legislation process. The parliamentary proposal is restrictive and only legalizes casinos, bingos (bingo video machines) and Jogo do bicho. The text also mistakenly says that the “State Lottery” is considered as a game of fortune, although this would only be in relation to the state lottery, because this “Lottery” is an autarchy linked to the Government of each State.’
As well as legalizing casinos, bingos (bingo video machines), Jogo do bicho and creating better conditions for the operation of State lotteries, the proposal also provides for the installation of up to 300 video bingo machines at racecourses and football stadiums (with more than 15,000 seats).
No room for online gaming, slot machines and sports betting
The exclusion of online gaming, and sports betting, which could be implemented almost immediately after the gaming law is approved, as well as slot machines (outside casinos) will benefit international operators, which at present benefit from Brazil business, with online casinos and sports betting offerings picking up large revenue from bettors in the country.
Needless to say, foreign operators do not contribute anything to benefit the Brazilian State or society. BNL said: ‘We are going to continue to allow the portals “.com” to profit from Brazilian gamblers. If we take into account the legislative exclusion of these three gambling activities, the Government will have an annual loss of some R$ 6.6 billion (US$ 1.974.776 million).“
Exclusion of slot machines means billions in state revenue loss
In their analysis, BNL reports figures prepared by a specialist in slot machine operations in respect of the exclusion of these gaming devices, as proposed by Rep. Mussi: ‘It is estimated that Brazil could have up to 600,000 electronic gaming machines, with an average gross gaming revenue of, say, $R2.000 per month, which means that total GGR would be $R14.4 billion (US$ 4.1 billion). This figure is arrived at taking into account the multiplication of the number of machines, times GGR, times the number of months of the year.
The organizational structure
In the second chapter, the proposed law states that games of fortune will be authorized by legislature that would delegate licensing of lottery operations to each State and the Federal District. In this respect, licensing to allow the operation of the popular street lottery, Jogo do bicho and bingos would be authorized by each municipality, while Casinos will be authorized by the Government.
All casinos, which will be located in an integrated complex with hotel, will be licensed through Government tenders as follows: One casino for each State or Federal District with a population of up to 15 million; Two casinos for each State or Federal District with a population between 15 and 25 million; Three casinos (maximum) for each State or Federal District, when the population is greater than 25 million.
Brazil will have 32 casinos
As proposed in the white paper, Brazil will have 32 casinos only, and only the State of São Paulo will have 3 casinos (43 million population). Rio de Janeiro, Minas Gerais and Bahia can accommodate 2 casinos each, and the other 23 States can hold one single casino. Authorization for casinos will be for a period of 30 years, renewable for an equal period.
Electronic gaming machines
EGM of any type can only operate connected in real time (online) with the supervisory and tax authorities in accordance with the established regulation. The proposal also states that gaming operators must inform the Ministry of Finance about all prizes exceeding R$10,000 (some US$3,000). Additionally, the white paper determines that casino slot machines can only can be installed on physical properties in integrated leisure complexes, and that it is prohibited to install EGM in any other place. Payback to players by approved EGM must correspond at least to 80% of bets received by each machine.
Bingos to have minimum of 1,500 m²
Bingo games will be exploited only in properties such as bingo halls, Jockey Club or football stadiums, which have obtained authorization to operate bingo games. The second paragraph of this article states that bingo halls must have an area of at least 1,500 m², and that bingo halls must not be built less than 1,000 metres from each other.
The paid capital for the operation of bingo business will be R$ 2 million when located in a municipality with up to 50,000 inhabitants; R$ 5 million when located in a municipality with more than 50,000 inhabitants. The term of authorization for the operation of bingo games shall be granted for a fixed period of 20 years, renewable for an equal period.
Video bingo machines
The proposed Bill sets the minimum number of video bingo machines at 150 units and a maximum of 300 machines in a municipality with up to 50,000 inhabitants; and a minimum of 300 with a maximum of 500 video bingo machines in a municipality with more than 50,000 inhabitants. Payback to players from video bingo machines must also correspond to at least 80% of the total bet for each machine.
The best proposal is for Jogo do bicho
The chapter relating to Jogo do bicho is the only one that is close to reality and can ensure the healthy operation of this activity. It also can provide immediate financial results for the federal Government with its prompt legalization. The activity, which will be operated by each State and the Federal District, requires that the operator has a paid-in capital of R$ 1 million, and has an authorization approved in the activity of 20 years, renewable for an equal period. In Jogo do bicho the identification of the bettor is not necessary.
For the operation of Jogo do bicho, all documents in any bet or extraction should be automated and offer the possibility of access in real time (online) by the Federal Government through the QMS system for the control of all bets. Accredited companies can redistribute among themselves part of their betting portfolio in order to reduce the risks in their operations. The final provisions that define Jogo do bicho indicate that this activity can start operations immediately through provisional authorisations, shortly after the publication of the law, following the rules approved for this.
The chapter which defines administrative breaches imposes sanctions on operators “by omission, fault or negligence, that are contrary to the legal provisions and regulations applicable to gambling, even in relation with authorisations, supervision and accountability procedures”.
The range of sanctions or penalties include: warnings, simple fines, daily fines, confiscation of instruments or equipment, documentation and other equipment and components of the operation, of machines and installations; as well as the partial or total suspension of activities through the prohibition of operations in the licensed establishment and cancellation of the authorization or concession.
All fines will be determined between values of at least R$ 10,000 and a maximum of R $ 5 million per each violation, according to the provisions by the regulations and the table of sanctions issued by the Government.
There is no tax on gaming entertainment
One of the positive chapters in the proposal determines that the imposition of taxes for the gaming activity will be imposed on the result and the betting itself: “For the effect of all tax purposes, tax shall be deemed on the gross income corresponding to the difference between the total amount of bets made and full prizes paid up.”
The chapter on problem gambling deals with registration and a ban to gambling establishments on any person who has been placed in the problem gambling registry. Such persons are those who have taken the decision to be excluded or who have had such exclusion imposed by a court decision, “according to the standards of the project or decision by the public prosecutor’s Office”.