Brazilian suppliers to receive 40% of revenue in gaming law amendments

Bill 442/1991 – which would legalise casinos online gaming, horse racing, slot machines, bingo and jogo de bicho – was passed by the Chamber of Deputies last week, sending it on to the Senate.

The bill provides that gaming machine suppliers for bingo and casino will be entitled to receive a 40% cut of gross gaming revenue, leaving operators in these verticals with the other 60%.

The initial bill also stated that operators must pay a 17% tax (CIDE) on GGR, and no other tax or social contribution. However, the Brazilian constitution expressly prohibits the federal legislature from granting state or municipal tax exemptions. As a result, operators now will not be exempt from the Municipal Tax on Services (ISS), which will fall between 2% and 5%, and must pay that as well as CIDE.

With the bill approved by the Deputies, the Senate may now deliberate over the bill, with some Senators having already expressed their opinions on the matter. Senator Carlos Viana of the Brazilian Democratic Movement was one of the most notable figures opposed, warning of concerns such as money laundering and gambling addiction in a Facebook post.

“International experience shows that large casinos are used for money laundering, drug trafficking and prostitution,” he said. “The inspection of this sector is very difficult. In addition, gambling and betting addiction is part of the International Code of Diseases.”

If the Senate approves the bill, it will go to the desk of president Jair Bolsonaro, who has previously indicated that he intends to veto the bill. However, if he does so, the Senate and the Chamber together would have the power to override a veto, if two-thirds of members of each vote to override.