Betting market grew in Brazil in a gray area

Report from Folha de S.Paulo addressed the need to regulate the sports betting market in Brazil. Dr. Matheus Puppe, partner in the TMT, Privacy & Data Protection area at Maneira Advogados, was interviewed to talk about the topic.

Betting market grew in Brazil in gray zone left by Bolsonaro government

The 2018 law should have been regulated until 2022, but this did not happen

Uirá Machado
SÃO PAULO

(Image: Freepik)

The sports betting market has grown in Brazil amid a vacuum left by the government of Jair Bolsonaro (PL), a kind of gray area of legality.

On December 12, 2018, when he was preparing to pass the presidential sash, Michel Temer (MDB) sanctioned law 13,756, approved days before by Congress and which, among other things, created this kind of “bet” lottery.

But the law did not come with specific rules for the sector. Instead, it established that, within four years, the Ministry of Finance would take care of the regulation. And that never happened.

For those offering these services, the absence of regulation appears to have made little difference. The sites have multiplied like never before in the country and have become almost omnipresent sponsors in several sports, starting with football.

"Once authorized by law, sites can enter the Brazilian market. Regulation would be a second step", says lawyer João Vitor Kanufre Xavier, who addressed gambling in his master's thesis at USP.

According to him, the rule approved by the Temer government opened a tacit exception to the Criminal Misdemeanors Law, which prohibits gambling in Brazil since 1941.

This octogenarian law prohibits “establishing or exploring gambling in a public place or accessible to the public”, defining gambling as follows:

“a) the game in which the gain and loss depend exclusively or mainly on luck; b) bets on horse racing outside a racecourse or place where they are authorized; c) bets on any other sporting competition.”

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The same law imposes a fine of up to R$200,000 on anyone who participates in the game as a bettor, but, according to the lawyer, the penalty does not fit in this new “betting” market.

“Law 13,756/2018 authorizes sports betting, so it wouldn’t make sense to charge users a fine”, says Xavier, who is a partner at the firm Galvão Villani, Navarro, Zangiácomo e Bardella Advogados.

The exception created by the 2018 law only applies to so-called fixed odds bets, those in which the amount to be won is predefined at the time of the guess. And as long as the bet is related to a real sports-themed event –jogo do bicho and bingo remain banned.

But, for lawyer Matheus Puppe, the fact that the 2018 law did not explicitly repeal the Criminal Misdemeanors Law leaves a scenario of legal uncertainty.

“In terms of legality in Brazil, online sports betting is in a gray area”, says Puppe, who is a specialist in new technologies and partner at Maneira Advogados.

“It is possible to argue that law 13,756/2018, by establishing a new type of sports betting, effectively ‘legalized’ this activity and, therefore, made the provisions of the Criminal Misdemeanors Law on the subject irrelevant”, says the lawyer. “However, it is an issue to be resolved by the Judiciary.”

This environment of uncertainty helps explain why sector operators are based abroad, in countries where sports betting is explicitly legalized.

“Although the bet can be placed from within Brazil, the financial transaction and operation takes place in a location where it is legal,” says Puppe. The Brazilian bettor, in this case, does not commit a criminal offense.

The absence of specific rules for this billion-dollar market brings a series of other problems. According to Guilherme de Carvalho Doval, partner at Almeida Advogados, these are uncertainties that affect all actors directly and indirectly involved in the sector.

“In addition to themes common to the regulation of any economic activity, the case of betting involves sensitive issues, such as concerns about money laundering money, third-party intellectual property rights and the issue of match-fixing”, says Doval, who is president of the Sports Justice Court of the Minas Gerais Football Federation.

In theory, regulation would address several of these issues. According to the law, to explore fixed-odd sports betting in Brazil, sites will receive authorization or concession from the Ministry of Finance.

“To operate regularly in Brazil, bookmakers must comply with regulatory requirements, leaving the gray zone that currently exists”, says Doval.

The government of President Luiz Inácio Lula da Silva (PT) promised to regulate the betting market, and the Ministry of Finance says it is finalizing a proposal for a provisional measure with this objective.

The initiative is in the government's interest because, currently, sports betting houses are based abroad and do not pay taxes in Brazil.

Thus, the definition of rules would represent a new source of revenue – an amount that the Minister of Finance, Fernando Haddad, estimates at up to R$ 15 billion.

Regulation must also address oversight, a sensitive topic given recent accusations of match-fixing.

In addition, other topics that are in the government's sights are website advertising and informative and preventive actions related to pathological gambling disorder.

https://www1.folha.uol.com.br/esporte/2023/06/mercado-de-apostas-cresceu-no-brasil-em-zona-cinzenta-deixada-pelo-governo-bolsonaro.shtml