The Luiz Inácio Lula da Silva administration refrained from taxing all winnings from sports betting despite technical recommendations from staff at the Finance Ministry and Brazil’s Federal Revenue Service, according to documents obtained by The Brazilian Report. The legal opinions that supported the provisional decree regulating online betting platforms — issued in late July — were obtained through Brazil’s access to information law and have not yet been made public.
Staff in Lula’s Finance Ministry proposed a flat tax on all winnings to raise revenue, but gambling industry lobbyists argued that the measure would be counterproductive and push customers away from the legal market. The documents also show that ministry staff do not have precise estimates of the revenue that would be generated from taxes on sports betting.
Since 2018, when foreign betting platforms were allowed to broadcast advertisements in Brazil, bettors have only paid 30 percent on winnings that exceed the income tax threshold and are declared as part of their income tax. In the new provisional decree, authorizing betting platforms to operate in Brazil, the rule was changed to immediately tax all winnings above the monthly income tax threshold, currently BRL 2,112 (USD 427). Smaller prizes remain tax-free, although they make up the majority.
The documents show that Paulo Guedes, who served as economy minister during the Jair Bolsonaro administration, proposed a draft provisional decree on sports betting to the then-president as early as May 2022 — information that was not previously known.
Mr. Bolsonaro took no action on the draft. Instead of starting from scratch, the Lula administration used Mr. Guedes’s work as a basis for drafting its own decree, which allows for a comparison of the two proposals.
The documentation, which runs to over 700 pages, includes a letter dated March 2023 from the National Association of Gambling and Lotteries (ANJL), the creation of which had been announced just a few days earlier. The...
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