This month in iGaming: July 2023

Brazil finally regulates sports betting, India introduces sky-high taxes, and Curaçao extends master licenses for a year.

Sports betting regulations come to Brazil

After nearly five years of delays, sports betting is finally regulated in Brazil. 

A provision measure establishing regulations was passed in May, the first sports betting tender was issued in June, and July saw President Luiz Inácio Lula da Silva sign the provisional measure into law. 

Initially, the measure is valid for 60 days, at the end of which period it can be renewed for another 60 days. 

However, reactions to the long-anticipated regulations are mixed. 

While the tax on GGR was earlier reported to have been 16%, the final rate is in fact 18%. But once all other taxes and fees are accounted for, operators face just over 30% in taxes on their GGR. Additionally, players will pay a 30% tax on winnings over R$2,112 (€402.60/$444.50).

The measure also includes penalties for operating a sports betting site without authorization — a conundrum for the country’s sportsbooks which had previously operated in the gray market. The issue of whether the penalties go into effect before gray market operators can acquire a license is a cause for concern. 

High taxes raise eyebrows in India 

Under the country’s governmental system, Indian gambling laws are largely up to individual states. At the federal level, in lieu of a national regulatory, the Ministry of Electronics and IT published rules to establish a series of self-governing bodies in January of this year. 

This July, the Good and Services Tax Council of India announced a decision to tax up to 28% of the value of all bets placed on online gaming, casinos, and horse racing. 

Union Finance Minister Nirmala Sitharaman stated that the high tax rate was not intended to smother the industry, but rather due to issues of morality, which in the view of the council set gambling apart from other commodities. 

The tax applies to regular online gaming as well as real-money casino gaming. 

Turnover taxes are always greeted poorly by those in the industry, as they fail to account for the fact that when players win, casinos are liable to pay taxes on revenue that they have in fact lost. 

Expectedly, less than a week after the decision was announced, over 100 companies signed an open letter asking the council to reverse its decision, as well as to differentiate between games of chance and games of skill. Signatories stated that the tax rate was likely to shake investor confidence, ultimately weakening the industry and creating a massive opening for black-market operators. 

Regulators in both Brazil and India would do well to study the tussle between sportsbooks and authorities in Kenya starting in 2019, when a number of sportsbook operators pulled out of the market in response to a sizable tax hike, only returning once the government relented and dropped taxes back down again. 

Due to the sheer size of both the Indian and Brazilian markets, it’s unlikely that high tax rates will prove such a deterrence that operators will abandon them entirely. However, as they’ve caused turbulence in other countries, it’s possible these two tremendous emerging markets have a bumpier road ahead than many anticipated.

Curaçao master license holders granted grace period

Curaçao’s days as one of iGaming’s most famously permissive licensors are coming to an end — but the transition won’t be as abrupt as many feared. 

A legal advisor to Curaçao’s Ministry of Finance, Sixiènne Jansen, explained at this year’s iGB L!ve that in order to ensure continuity for operators, all of Curaçao’s master license holders would have their license validity extended for a year starting in September 2023. 

After the new ordinances come into effect, sublicensees will have 90 days to apply for a license under the new regime. Those who do not wish to switch over to the new system will be able to continue operating until their master licensee’s validity period expires. 

The shake-up of Curaçao’s master license-and-sublicense system is causing new operators to widen their search for licensing authorities, with eyeing the overlooked island of Anjouan in the Indian Ocean.