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  • Thomas Carvalhaes: Brazil should copy Colombia to end regulatory ‘soap opera’

Latam gambling expert Thomas Carvalhaes believes Brazil should follow the lead of Colombia in regulating online gambling if it is to create a sustainable, regulated market.

Carvalhaes is the managing director of Brazilian online betting operator Vai De Bob, and has previously worked with several global brands, including Hero Gaming and LeoVegas, to help them establish and develop their presence in Brazil and other Latam markets.

Speaking on a Latam-focused panel at iGaming NEXT Valletta 23 today (21 June), Carvalhaes suggested that regulations recently proposed by the Brazilian government will serve to undermine the creation of a fair and sustainable market in the country.

Brazil’s latest regulatory proposal

In April, the government introduced a proposal for sports betting regulation which included a licensing fee of R$30m, a tax on GGR set at 16%, and a further tax on customers’ winnings set at 30%.

“For me as an operator, that’s completely unfair,” Carvalhaes said during today’s panel session.

“Nothing justifies a R$30m fee for sports betting only. If anyone feels positively about that as an operator, I really want to talk to them and find out their ROI plan, because it doesn’t make sense to me. 

“How can you invest R$30m, unless you’re a multi-million, massive giant? For the small operators, what’s going to happen is they’re probably going to run a massive black market, just like happened in Mexico. 

“You have the largest guys there running the show, and then you have a lot of guys just running under the radar. That’s probably what’s going to happen [in Brazil] because we’re talking R$30m, plus taxing the player 30% on winnings.”

Change is coming

While the proposals have been viewed unfavourably by many in the sector, they at least offer some level of certainty into the future of the market.

Sports betting was legalised in Brazil in 2018, but the government is yet to introduce a nationwide licensing regime and regulatory framework for the sector.

Instead, at present some states have used their own interpretations of existing lottery regulations to begin issuing licences to betting operators.

The political split between state and federal lawmakers, alongside continuing political turmoil and a great deal of “going back and forth, back and forth” on betting regulation, have turned the situation around gambling into “a bit of a soap opera,” Carvalhaes added.

That brings dangers for the betting sector, as Carvalhaes suggested, because “some states are regulating betting on the state level, but we don’t know if that’s going to stand up the moment that national regulation comes.”

For that reason, he added, “we need regulation on the national level for sports betting.”

What’s the alternative?

In order to bring about a strong betting sector nationally, Carvalhaes suggested the Brazilian government should aim to emulate its neighbours in Colombia, where well defined regulations have helped to develop a competitive and thriving online gambling sector since the market launched in 2017.

“For me as an operator, Colombia is the best example of what must be done in the other countries in Latin America. 

“Firstly, you have your target audience – the population with a very high propensity to gamble. You also have more than 80% internet penetration in the country, and Colombia is a technology hub for Latin America.

“And then, when it comes to the market, per se, we have regulation that’s clear. There’s no way you can get tangled up when it comes to regulation in Colombia, because it’s clear: you offer your product there, you pay 16% taxes to the government and to [local regulator] Coljuegos, and you can operate.

“Most of the operators that I know there are very happy with the results. As a regulated market, I think Colombia is the best example,” Carvalhaes concluded.

The development of a nationwide regulatory framework remains an ongoing discussion in Brazil. The latest predictions suggest regulations may be introduced by 2024.