A São Paulo courtroom has ruled that Brazilian poker rooms don’t have to pay taxes on tournament prize money. This ruling, which involves a company called Stack Eventos Esportivos, will essentially save operators a lot of money.
The company, which helps stage the Brazilian Series of Poker (BSOP), challenged a municipal tax called imposto sobre servicos (ISS). They were being forced to pay taxes on prize money offered through BSOP tournaments.
Tax Ruling Could Have Broader Implications
The 16th São Paulo Public Finance Court lifted the ISS tax on poker operators. The municipality now has a change to challenge the ruling.
However, the Public Finance Court’s decision could have broader implications across Brazil. Other poker tournament organizations might be encouraged to challenge similar laws.
Devanir Campos, who serves as the BSOP’s technical director, notes that the ISS is hurting the game in Brazil. But he sees a turning point after Stack Eventos Esportivos’ victory.
“It’s a decision that leads to the growth of our sector in Brazil, as it provides a broad legal understanding of the functioning of the ecosystem of such a new sport in our country,” Campos said.
ISS Is a Bad Law to Begin With
The ISS forces poker rooms to pay taxes on the prize money they offer. Essentially, the tax considered the tournament prizes that operators pay to players as a taxable event.
However, BSOP noted that the players are the ones benefiting from the money rather than poker rooms and organizations. Operators, meanwhile, merely get a small cut in the form of rake.
They need to charge higher rake in tourneys and cash games to make up for the 2% to 5% taxes on prize pools. Therefore, both the rooms/organizers and players get hurt in the end. No other major poker destination besides Brazil has such a law in place on a wide scale.