Gaming in Brazil

Brazil is a country with 210 million people, the 6th largest population in the world. In 2003, there were over 1,200 “Bingos” (slot parlors) in the country generating ~ $800 million of GGR; gaming was then outlawed in an effort to eliminate criminal involvement.

Both houses of Brazil’s Congress, the Senate and the Chamber of Deputies (“COD”), proposed bills legalizing gaming to generate economic growth, jobs and tax revenues. Published analyst estimates for Brazil Gaming GGR range from $9B to $17B; Brazil would be the third largest gaming jurisdiction in the world after the US and Macau. The bills proposed a massive legalization of gaming to include Integrated Resorts, Slot Parlors, Routes, Lotteries, Sports Betting, Internet Gaming and legalization of the currently popular and illegal Jogo de Bicho.

Based on our discussions with government officials, lawyers, lobbyists and industry participants, it appears that legalization will occur in a step fashion to enable regulation to keep up with legalization. Our assessment is that the sequence will be lottery privatization, sports betting, large-scale casinos, internet gaming and then slot parlors (bingos) and others.

7/9/2020 Update:

Sports Betting

  • Land-based and online sports betting was officially legalized on December 13, 2018 (PM) 846/2018 authorizing the Ministry of Economy to oversee both land-based and online fixed odds sports betting
  • The Ministry of Economy is within a two-year regulatory period, extendable for an extra 2 years, during which it seeks to establish the framework for sports betting 
  • All licenses will be granted by the Ministry of the Economy, which will also serve as a regulator in the sector. The National Bank for Economic and Social Development will set out the guidelines based on which potential license holders would apply.
  • According to Law No. 13,756 / 2018, the proceeds from the collection of the sports lottery are destined as follows:
    • Land base: 80% for payment of prizes; 0.5% for social security; 1% for educational entities; 2.5 % for FNSP; 2% for football sports entities; and 14% for expenses and maintenance coverage.
    • Online: 89% for prize payments; 0.25% for social security; 0.75% for educational entities; 1% for FNSP; 1% for football sports entities; and 8% expenses and maintenance
  • B2B suppliers of sports betting are most actively focused on the opportunity. Companies like Kambi, Playtech and Sportradar are getting positioned.
  • Operators are focused on learning about the Brazilian sports bettor (different language, betting interests etc…); the most popular sports for betting will be soccer, tennis and mixed martial arts (MMA)

Gaming

  • Several Deputies introduced Gaming bills calling for the legalization of integrated casino resorts across 32 locations (throughout Brazil’s 27 states)
  • The bills have been merged with bill 442/2019 of the Chamber of Deputies
  • The bill carries a 10% tax rate on gross gaming revenue for a 30-year license, with the following specifications:
    • One casino resort per state with a population of 15M
    • Two casinos per state with a population of 15M-25M
    • Three casinos per state with a population greater than 25M
  • President Jair Bolsonaro presented a decree calling for new policies to attract private investments for new ventures and the use of cultural and natural assets in the country, under the Investment Partnership Program (PPI)
  • This opens the door for Tourism to call for changes on policies to attract private investment to tourism resorts including IR’s, which will  attract billions of investment and generate thousands of jobs
  • Among the gaming companies, Hard Rock is most focused on Brazil as it continues to develop several hotels in the country
  • We expect Rio de Janeiro and Sao Paulo to attract the interest of the larger gaming companies, including LVS, especially in light of the fact that it recently ended its pursuit of an IR in Japan

Spectrum Gaming Capital released a report on Attracting Investment to a New Brazil Gaming Industry

Please click to access the reports in both English and Portuguese versions

 

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