Brazil

MIXED COMMISSION APPROVES PM 846 AND BRAZIL TAKES KEY STEP TO LEGALIZE SPORTS BETTING

A Mixed Committee approved Provisional Measure (PM) 846/2018 that regulates the transfer of funds from lotteries to areas such as public safety, culture and sport, and includes the permission for the Union to legalize and create the sports betting modality under the authorization of the Ministry of Finance. This support from parliamentarians is a key step so that the House and Senate can now vote before the end of the year and Brazil can start 2019 with legalized betting. 

The mixed committee of Provisional Measure 846/2018, the PM of the Lotteries, approved the report presented by Senator Flexa Ribeiro (PSDB-PA) on Wednesday night (7). The text regulates the transfer of funds from lotteries to areas such as public safety, sports and culture, and proposes the institution of a lottery modality called fixed quota bets (sports betting) – which may occur in physical or electronic way. The PM goes now to the analysis of the plenary of the Chamber of Deputies and, later, to the Senate.

The PM of the Lotteries is valid until November 28 and was published in August as a new version of MP 841/2018, published in June and no longer valid. The new text emerged from a coordination of the Ministries of Culture and Sport, after pressures from entities from both sectors, since the previous PM decreased the lottery transfers to these areas to increase the resources of the National Public Security Fund (FNSP). The government foresees that the PM of the Lotteries will guarantee the annual transfer of about R$ 1 billion (US$ 270m) for public safety, R$ 630 million (US$ 170m) for sports and R$ 443 (US$ 120m) for culture.

At a quick meeting, parliamentarians heard the rapporteur’s amendments. Nine changes were made to the original text. With respect to lotteries, fixed-rate betting of the PM determines a period of two years, extendable by two others, so that the Ministry of Finance establishes the rules for authorization of concession to operators of the modality.

Regarding the revenue collection division of the fixed quota modality, the units were included in 1% of revenue and 0.75% when lotteries were carried out physically and electronically; resources that remain at the expense of the National Fund for Public Security.

Football sports entities also entered the revenue division of fixed quota betting with 2% of the revenue and 1% when bets are made physically and electronically, resources that remain at the expense of reducing the minimum prize.

During the discussion of the topic, parliamentarians introduced their doubts about the matter. As a result, the session was declared suspended and reopened on that date, when certain changes were approved in relation to the maintenance of the lottery operation.

The percentage allocated to the Federal Savings Bank (Caixa Econômica Federal – CEF), as a cover for maintenance and costing expenses, is recovered from the proceeds of the collection of numerical forecasts for the percentage proposed by MPV nº 841, of 19,13%.

Funds destinations

Of the funds raised from the sports lotteries, the PM will transfer the FNSP to 11.49% this year and 2% from 2019. The fund will also receive 5% of the federal lottery funds in 2018 and 2.22% from next year. For the National Fund of Culture (FNC), the transfer will be 1% of the resources of sports lotteries. Of the resources of the federal lotteries, the crop will also receive 0.5% from next year. FNC will still receive 0.4% of Lotex’s funds.

Among other determinations, the PM also states that the participation of the Ministry of Sports in the collection of sports lotteries will be 10% in 2018, falling to 3.1% from 2019. The quota of the Brazilian Olympic Committee (COB) is fixed in 1.63%, while the Brazilian Paralympic Committee (CPB) holds 0.96% of the resources of the sports lotteries. The PM allocates to the prizes of sports lotteries the value of 37.61% by the end of 2018 and 55% from next year.

Changes

Flexa said that throughout his work in the commission, he has tried to meet the demands of deputies, senators and representatives of entities linked to sports and culture. The PM benefits two social entities: annually, the income from two competitions of the Sports Lottery must follow for the National Federation of Associations of Parents and Friends of the Exceptional (Fenapaes) and for the Red Cross. In the report, Flexa allocates the income of three contests per year to social entities, by including the National Federation of Associations Pestalozzi (Fenapestalozzi) as beneficiary.

Flexa also deals with the percentage distribution of the product of the prognostic lottery collection, benefiting areas such as public safety, health and the National Fund for the Rights of Children and Adolescents. Another change in the report was the determination that between 10% and 15% of the FNSP’s lottery resources should be compulsorily applied in housing programs for the benefit of public safety professionals or in programs to improve the quality of life of these professionals.

According to Flexa Ribeiro, members of the government, specialists in the sectors involved, and senators and deputies were heard. He stressed that holding a public hearing, promoted by the commission on October 30, was important for the preparation of the report. There, they gave their opinions and analysis experts such as Pedro Trengrouse (Academic Coordinator of the course FGV/FIFA/CIES Executive Program- Improvement in Sports Management), Alexandre Manoel Angelo da Silva (Secretary of Fiscal, Energy and Lottery Monitoring of the Ministry of Finance- SEFEL), and Gilson César Pereira Braga (National Superintendent of Lotteries of Caixa Econômica Federal), among others.

Institution of lottery mode denominated fixed quota bets

The gaming market in electronic form about real sports events, where, on the occasion of the bet, the bettor knows the amount of the prize to be won if he hits the prognosis, is estimated at R$ 4.3 billion (US$ 1.16bn) in Brazil.

In the absence of a rule regulating this lottery niche, bets are placed on electronic sites hosted abroad, without the country collecting any cent of the amount of bets placed by its residents.

At the suggestion of SEFEL, a proposal is presented to make feasible the exploration of this new type of lottery, called fixed-stake bets. Given that it is necessary to channel this lottery activity to the rules of Brazilian law, the prizes must be higher than traditional lotteries.

It is worth mentioning that there is a complementarity between the different types of lotteries, since the fixed-betting lottery targets younger people, who will become the target audience for traditional lotteries in the future.




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