Land-based gambling

Types

What types of land-based gambling are permitted in your jurisdiction, and is gambling regulated at a national or subnational level?

The two forms of gambling only permitted in Brazil are betting on turf competitions and lotteries. All other types of gambling are prohibited.

According to article 22, XX of the Brazilian Federal Constitution, the federal government has the exclusive competence to legislate over gambling.

Establishment licensing

Please describe the licensing criteria to operate land-based gambling of each type or classification. Does your jurisdiction limit the number of available licences?

LOTEX and fixed-odds sports betting may be explored by a private entity as a public service concession.

The application for a horse racing gambling licence should be made before the Ministry of Agriculture. The applicant must be a non-profit entity legally incorporated in Brazil, in ownership of a racetrack, and who also needs to demonstrate the technical and economic viability of the weekly racing schedule and the floorplan of the racecourse. That entity must present the draft of a general betting plan (which includes the rules applicable for each game to be run by the operator, such as prize, ticket value, minimum and maximum betting amounts and payout).

Director, officer and owner licensing

Must individual directors, officers or owners of licensees also be licensed or reviewed for suitability?

Current legislation does not require directors, officers or owners of licensees be licensed or reviewed for suitability.

Location

May a gambling location be part of a resort, restaurant or other multi-purpose location? What limitations apply?

Current legislation is silent in this regard.

Passive/institutional ownership

Are there provisions for passive or institutional ownership that allow for exemption or modification of licensing requirements?

Current legislation is silent in this regard.

Responsible gambling

What responsible gambling obligations apply to licensees?

Current legislation is silent in this regard.

Taxes

What type of tax and what tax rate applies to each form of lawful land-based gambling activity?

Brazilian law provides that prizes won on lotteries, horse races or any other kind of prize draw are subject to the following withholding tax:

  • for prizes paid in kind to:
    • residents in Brazil - 30 per cent of the prize;
    • residents abroad - 15 per cent of the prize; and
    • residents in a low-tax jurisdiction - 25 per cent of the prize; and
  • for prizes paid in goods or services to:
    • residents in Brazil - 20 per cent of the prize;
    • residents abroad - 15 per cent of the prize; and
    • residents in a low-tax jurisdiction - 25 per cent of the prize.

In the case of a prize paid to the owner of the horse in turf competitions, a withholding tax of 15 per cent is applied. In this case, if a legal entity is the owner of the horse and subject to the real profit regime taxation, the amount paid as withholding tax shall be deducted from the amount due as corporate income tax. In all other cases, the above-mentioned 15 per cent tax is the final income tax levied over those premiums.

In the case of prizes paid to Brazilian legal entities, such entities are also subject to social contributions on gross revenues (PIS/COFINS) and social contribution on net profits (CSLL) taxes.

Note that Law No. 7,291/1984 establishes that horse race betting operators must pay a monthly fee to the CCCCN based on the number of bets taken in the previous month, less the amount paid as prizes. The percentage that shall be paid will be based on the reference value (RV) published by the CCCCN and according to the following progressive accumulative scale.

Revenue on bets equal to:

  • between 1 and 2,500 multiplied by RV - shall be exempt;
  • between 2,501 and 3,500 multiplied by RV - a 0.5 per cent rate will be applied;
  • between 3,501 and 4,000 multiplied by RV - a 1 per cent rate will be applied; and
  • over 4,001 multiplied by RV - a 1.5 per cent rate will be applied.