Brazil’s newly opened regulated online gambling market is going gangbusters, but the dark cloud of taxes could rain on the whole parade. That’s the message from Rei do Pitaco’s chief legal officer Rafael Marchetti Marcondes. In a recent webinar titled, The Future of Gambling in Brazil, Marcondes warned players and operators alike about the impact of taxes on one of the world’s newest gaming markets.
On the operator side, Marcondes pointed out the potential danger of the Brazilian government actively collecting back taxes. He points out the during the five years prior to formal legalization, the Brazilian market operated in a semi-legal fashion that did not include vigorous tax code enforcement. Gaming lawyer Luiz Felipe Maia pointed out that a new law allowing strong enforcement of back taxes from that era is asking for trouble.
“The reason why I was so strongly against it was because it creates evidence of an ongoing operation. Basically you’re transferring the clientele, the funds, the brand. And in Brazil one of the legal consequences is succession on all liabilities, including tax liabilities,” he said.
The problem extends to efforts to make operators liable for player taxes during that same, five-year period. “Of course, it would be subject to the courts to decide that it’s not constitutional, but if they decide to go after the players, they may request from the operators the list of all prizes paid in the last five years. And that could generate a lot of noise and a lot of problems for the industry,” he added.
Marcondes concluded that excessive taxes and tax code enforcement would almost certainly drive players back to black market operators.