Betting Profits and Taxation
Considering strictly the Brazilian legislation of taxes, the answer is no, online betting profits aren’t tax-free. The kind of taxation applied, in theory, would be the same that would affect a gambler that profits at a foreign casino during a trip to Las Vegas, Rivera or Punta del Este, for example, i.e. the capital gains tax.
Taxation in Practice
The application of the capital gains taxes to gambling profits is very complicated, at best.
Unlike other investments such as stock market investments or even very risky markets like derivatives, there’s no clear regulation to the activities of professional and recreative punters in Brazil.
Part of the reasons behind such blurry points of our laws has to do with the fact that gambling was nearly forgotten in Brazil for years. The monopoly for in-land operations such as lottery, owned by CEF, imposed taxation, for example over lottery prizes, that isn’t even ‘perceived’ by the population, as the lottery jackpots are advertised in net terms, not gross values like in the USA for example.
In practice, if you win a sports wager or at an online casino, the companies won’t ‘tell the government’, like the stock exchange B3 always do if you sell stocks. It simply doesn’t work that way, at least until the law changes eventually.
For that reason, the most obvious consequence is that if you get to become considerably richer because of an online casino jackpot prize (it is possible, games like Mega Moolah could pay prizes of 80 Million BRL!) or if you develop keen sports betting skills up to the point of becoming a part-time or full-time professional gambler, like Robert Kiyosaki, says, ‘you must tell the government the good news’. His original statement was about lottery prizes in the USA.
If you profit some beer money, you are in theory in debt with the government and should always pay your taxes, but the consequences of not paying taxes over 10 BRL or 100 BRL that pop into your bank account aren’t big. In a way, it’s like when you are at a restaurant and you pay the bill for the entire table with your credit card and some friends hand over cash to you or transfer money into your bank account at a later date: in theory, from a strictly mathematical point of you, you had ‘more income’, but the government knows this kind of stuff just happens (the restaurant example).
In a way, common sense would be to pay taxes over gambling profits to avoid problems. If you are kind of lousy with your taxes, which surely isn’t a good idea, at least take care to avoid big financial problems if you win big.
The answer to the question of this article is simple: no, sports betting and casino profits obtained through online gambling houses are not tax-free.
However, sooner or later we should have clear legislation about this topic, although the exact date is quite hard to tell.