Brazil’s Video Games, Daily Fantasy Sports, eSports Could Win ‘Industry’ Tag

Posted on: November 16, 2022, 08:05h. 

Last updated on: November 16, 2022, 10:00h.

Video games, daily fantasy sports (DFS), and eSports are on track to receive greater recognition in Brazil, where they are already extremely popular. A bill currently in the works would legitimize them as part of an official “industry,” leading to new jobs and tax benefits for companies in the space.

Intel Extreme Masters Rio Major 2022
Fans watch the Intel Extreme Masters Rio Major 2022 in Brazil this month. Video games, eSports, and DFS are close to becoming part of a legal industry in the country. (Image: ESL Pro)

The new framework is in the Senate, and the consensus is that the chamber could approve it this week. Brazil is one of the largest markets for the development of games and software. But companies that could otherwise help it grow aren’t impressed with the government’s approach.

Because of the way Brazil defines the segment of video games and DFS, they fall into the same category as slot machines. Therefore, the tax bracket is higher on the scale, limiting innovation and growth.

A New Era for Gaming

With the expected approval of the bill, the development of electronic games will be considered research and technological innovation. This will allow companies to enjoy tax benefits.

The Brazilian Association of Fantasy Sports (ABFS, for its Portuguese acronym) estimates the measure will lead to 5,000 new direct and indirect jobs. These would appear in the industry before the end of next year, and only in the DFS space. That implies additional job creation in the others.

Gambling revenues could double by 2026, reaching R$120m (US$22.5 million), as well. This would put Brazil as the third-largest market in this segment, taking a spot behind the US and India.

The Senate will discuss a bill that has been alive for the past several months. Initially, it addressed console and PC games, but later grew to include eSports and DFS.

The popularity of eSports continues to rise in Brazil. The results of the most recent Game Brasil survey, an annual study on the consumption of online gaming in the country, showed that 81.2% of gamers surveyed had heard of eSports. This translates into a rise of 16.9% compared to last year.

Brazil Politics Calm Down

Brazil is working on the transition from the government of Jair Bolsonaro to that of Luiz Inácio Lula da Silva following the recent runoff election. It’s a slow process, prolonged even more by the protests that followed the vote.

The result is less interest in addressing gambling issues at the highest level of government, and more in political preening. At the height of that is an effort to change Brazil’s constitution to give da Silva more money to fulfill his campaign promises.

That amendment must find support by December 15, the deadline set for voting on the 2023 budget bill by Congress, if it’s to survive. As a result, any other legislative issues are on the back burner until then.

In addition, the current government has begun pouting since the bitter defeat. Bolsonaro has kept a low profile, clearing his schedule and remaining quiet on social media, where he had a strong presence before his loss.