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Brazil’s gambling landscape is undergoing yet another shift as authorities define poker as a game of skill, and look to legalize and regulate tournaments of poker, snooker and chess — both in person and online. Part of the decision comes from the potential tax revenue that could be generated: an estimated $416 million USD.
Brazil seeks to expand poker, chess, and snooker betting to generate additional tax revenue. ©Markus Winkler/Unsplash
Brazilian gaming authorities and the Ministry of Economy are looking at a proposal to legalize and tax chess, snooker, and poker thanks to pressure from businesspeople who are interested in investing in the market in the country. These investors need more legal certainty around the games in order to bring their business to Brazil.
This attitude is part of the reason Brazil has moved forward to legalize several new gaming verticals, which have existed in grey areas in the country so far, like sports betting. Brazil has also opened up proposals for additional casinos through the country, including within the Amazonas region. Most recently, Brazilian gaming authorities have brought a new lottery proposal to the Senate to explicitly benefit Health and Tourism sectors hit hard during the COVID-19 pandemic.
As with all of these burgeoning verticals, the decision mainly comes down to money, and Brazil’s research has shown that there is a large potential for money to be made with these so-called “games of skill.” The Ministry of Economy has determined that within only poker competitions, R $2.2 billion ($416 million USD) could be generated for public tax revenue.
The collection would be based on a taxation of 20 percent of the total prizes, adding up to a tidy sum for public projects. Aside from prize money and income tax, a further tax could be added to the sales of tickets and to aspects of the live events themselves.
According to data from the European Gaming and Betting Association, the UK collects revenue of R $3.1 billion ($432 million USD) from just its online poker industry. Brazilian experts have been using this as a benchmark for what could be possible within the South American country. Not to mention, the UK’s population is less than half of Brazil, meaning Brazil may contain even more potential tournament fans.
These many gaming developments have seen to come as a direct response to the challenges faced during the COVID-19 pandemic. The country has a clear need for further public funds, which new lotteries and gaming verticals can certainly help generate. However, Brazil’s Secretary of Evaluation, Planning, Energy and Lottery of the Ministry of Economy, Gustavo Guimarães argues that this move is not mainly about money in his opinion, but rather to open this market in Brazil and see what potential is there.
Part of the new proposal to generate tax from legal poker tournaments is a change in the definition of the game, from one of chance to one of mental skill. The exact text in the proposal is still under discussion, but basically would define a game of skill or mental ability as one that depends on intelligence, dexterity, knowledge of fellow players, and ability to succeed. This is as opposed to games that require luck, like lottos, roulette or bingo.
If the proposal goes through, the Ministry of Economy may not only consider poker a game of mental skill, but also snooker, chess, billiards, petanque, bowling, backgammon, e-sports, and even dominoes.
This particular aspect of the law has been in debate for some time, as earlier in the year, a Brazilian judge ruled that poker was in fact a game of skill. The court case involved a man who had organized a poker game for 28 people at his home — but possibly accessible to the public rather than just a private game for friends. A police raid shut down the games and confiscated tables and other poker accessories.
The ruling, which took place in San Pablo, ultimately came down to this definition of a game of chance versus skill. Judge Tânia Magalhães Moreira da Silveira ultimately rejected the complaint against the poker organizer, creating a precedent for poker to be considered a game of skill and not luck. It is the luck element that is not fully legal in the eyes of the Brazilian courts at the moment.
The case was probably further helped by the fact that poker has been categorized as a sport within Brazil since 2016. This controversial decision was approved by the Brazilian Ministry of Sports, and poker was compared to chess and backgammon. It was also, in a sense, an interstitial step for poker fans — like the Brazilian Confederation of Texas Hold’em (Brazilian Conferedaração Texas Hold’em) — who are awaiting the game’s full legalization.