The Brazilian economy is at its weakest point in years, leaving Latin America’s largest economy languishing in recession. On top of an increasing inflation rate that is eroding the purchasing power of Brazilian consumers, the unemployment rate continues to rise. In September, the Brazilian economy lost 95,602 jobs, up from 85,543 jobs lost in August, according to labor ministry figures reported by Reuters. Lost jobs and weaker consumer spending means reduced tax revenue. With the government struggling to figure out how to shore up its own finances, lawmakers are now weighing a controversial plan to raise tax revenue by legalizing gambling.
Brazil has not allowed casinos since 1946, and in 2007 Brazil outlawed bingo halls amid fears that they could be used for money laundering. But even today, federal lotteries and horse race betting are legal. The latest suggestion to expand the kinds of betting allowed under Brazilian law now comes as Congress looks for an alternative to President Dilma Rousseff’s approach of raising taxes to close the budget deficit. Rousseff’s own chief of staff proposed legalized gambling when lawmakers suggested that they would not accept more tax increases, Reuters reported.
Supporters of legalized gambling say that Brazil can’t afford to forego an estimated 23.5 billion reais, or $5.9 billion, that the country would collect annually in taxes. But even if the proposal wins lawmaker support, it faces the additional obstacle of winning over public opinion. Many people still associate casinos with corruption, and public feelings regarding corruption are still raw in the wake of the ongoing Petrobras scandal.
Legalizing gambling would not create a new industry. Instead, it would create a way to regulate and tax an industry that at present is operating illegally. The Brazilian numbers game known as “game of animals,” along with online gambling sites comprise an estimated 18 billion reais market, according to Reuters.
Mauricio Quintella, leader of the center-right Party of the Republic, is one of the lawmakers leading the legislative exploration of legalized gambling. He tells Reuters that Brazilians who want to gamble take their money outside of the country and leave it – and any taxes – there. The legislative research on a possible gambling tax is still preliminary. But even if a law is passed, Maia says the government would need about a year to create the infrastructure to regulate and license gambling operations. That means that regardless of where people stand on the proposals, there is one sure bet: legalized gambling will not be a quick fix for Brazil’s present, and worsening, budget woes.
